REVISITING SOUTH AFRICAN EMPLOYMENT TRENDS IN THE 1990S

This article revisits South African employment trends recorded since 1995. In particular, it investigates whether the job losses and gains recorded by the October Household Survey jobs in the mid-1990s reflect the reality. This is done by comparing the different official data sets, and by exploring alternative sources of information for three sectors that substantially influenced this trend, namely formal agriculture, mining, and community, social and personal services. Potential inconsistencies within the October Household data are assessed, particularly in relation to the distribution of employees across formal and informal sectors and the categorisation of unpaid family workers. The implications of possible changes to the employment trend from 1995-2006 are considered. This article finds that the evidence is strong enough to call into question published employment trends. According to the October Household Survey, formal employment fell by 1.4 million between 1995 and 1997. The OHS and Labour Force Survey shows that formal employment then grew by 1.9 million between 1997 and 2006. According to the revised figures presented in this paper, 73,000 to 530,000 formal jobs were lost between 1995 and 1997 and 1.4 million net new jobs were created between 1997 and 2006. It is therefore possible that the plummeting and "recovery" of employment in the 1990s were both considerably less dramatic than that reflected in the official statistics. Further research and investigation would be required to validate these trends.     

THE IMPACT OF HIGHLY ACTIVE ANTIRETROVIRAL TREATMENT (HAART) ON EMPLOYMENT IN KHAYELITSHA

This paper examines the impact of highly active antiretroviral treatment (HAART) on labour force participation of people living with HIV/AIDS in Khayelitsha, South Africa. Cox Proportional Hazard Models with stratum effects for three medical clinics, and Accelerated Failure Time Models with individual specific unobserved shared effects (frailty), are estimated for transitions from inactivity to unemployment, and transitions from unemployment into employment, using a longitudinal data set. The findings of this study indicate that HAART leads to greater activity in the labour market, but there was not a strong effect on re-entry into employment.     

THE CONTRIBUTIONS OF MANUFACTURING AND SERVICES TO EMPLOYMENT CREATION AND GROWTH IN SOUTH AFRICA

This study examines the linkages between the manufacturing and services sectors, and between each of them and the rest of the domestic economy, based on analysis of input-output tables and employment trends. This reveals that manufacturing is particularly important as a source of demand for the services sector as well as the rest of the economy through its strong backward linkages, which suggests that in this respect a decline in manufacturing could negatively affect future growth. Services are especially important in terms of employment creation, both direct and indirect.     

QUANTIFYING THE OUTSOURCING OF JOBS FROM MANUFACTURING TO SERVICES

There has been debate internationally and in South Africa about the extent to which a relative decline in manufacturing employment and rise in services employment can be accounted for by intersectoral outsourcing of jobs in the domestic economy. This article develops a new methodology for testing for and quantifying outsourcing at an economy-wide level. This methodology is used to analyse intersectoral shifts in employment in South Africa between 1997 and 2005. Trends in employment in the business services subsector of services are also examined for what they suggest about the extent of outsourcing. Overall, the results suggest that intersectoral outsourcing accounts for some but by no means all of the apparent shift in employment between the manufacturing and services sectors in South Africa.     

GRADUATE UNEMPLOYMENT IN THE FACE OF SKILLS SHORTAGES: A LABOUR MARKET PARADOX1

Analysts agree that South Africa's unemployment is structural in the sense that the unemployed generally possess lower skills than what is required by the economy. In the context of increasing demand for skilled workers due to technological changes and the need to become globally more competitive, graduates would be expected to find employment without difficulty. However, against expectations unemployment has been increasing among young people with tertiary qualifications since 1995. This paper investigates the nature of this phenomenon. Evidence suggests that learners are inadequately prepared for both tertiary studies and entry into the labour market. Lack of, or inadequate career guidance means that they do not choose fields of study and types of qualifications with good employment prospects. In addition, lack of soft skills and workplace experience mean that employers are reluctant to employ graduates, preferring more experienced people instead.     

REVISITING INFORMAL EMPLOYMENT AND SEGMENTATION IN THE SOUTH AFRICAN LABOUR MARKET

This study revisits the definition of informal employment, and it investigates the puzzle of high open unemployment co‐existing with relatively limited informal employment in South Africa. We estimate earnings equations using data from the September 2004 Labour Force Survey and present evidence of persistent earnings differentials not only between formal and informal employment, but also between types of informal employment. These persistent earnings differentials are suggestive of complex segmentation in the South African labour market and challenge the presentation of informal employment as an undifferentiated residual with no barriers to entry or mobility.     

GROWTH,EMPLOYMENT AND UNEMPLOYMENT IN SOUTH AFRICA

The high rate of unemployment in South Africa stands out in an otherwise vastly improved set of macroeconomic fundamentals compared with the situation in the early 1990s. One might be tempted to argue that by this single indicator alone, the government's macroeconomic policies have been a failure. This paper explains why jumping to such a conclusion would be a mistake. Annual time series data on total formal sector employment is constructed dating back to 1946. The relationship between economic growth and formal sector employment is then measured and changes in the employment coefficient over time are described. The employment coefficient was found to be relatively stable, with a long‐term average value of 0.5. It returned to this value after a short‐lived collapse in the mid‐1990s. It is concluded that the main reason for the persistently high and rising rates of unemployment in South Africa since the mid 1990s was the very large increase in the labour force and not a historically deficient growth or employment performance of the economy.     

THE EFFECT OF THE SOUTH AFRICAN OLD AGE PENSION ON LABOUR SUPPLY OF THE ELDERLY

In this paper, we estimate the effect of the means tested South African Old Age Pension on labour supply amongst the elderly African subpopulation in South Africa. We find significant decreases in employment rates and labour supply. Those who remain employed beyond the pensionable age are more likely to work in jobs with flexible hours of work, and work even fewer hours than people in similar jobs who are not pension age‐eligible. Our results suggest that governments do need to consider the labour supply related incentives provided via its various welfare programmes.     

THE MEASUREMENT OF EMPLOYMENT STATUS IN SOUTH AFRICA USING COHORT ANALYSIS, 1994‐20041

We analyse trends in employment, unemployment and labour force participation by simple graphical techniques, using all the October Household Surveys and the September Labour Force Surveys. We show that African male employment in 1995 seems high, when compared to all the other surveys. Furthermore much of the increase in African female labour force participation is concentrated in the period 1998 to 2000, which suggests that measurement and sampling changes may be partially responsible for the trend. We track cohorts of individuals over the eleven years for which we have data. We show that young people are leaving school earlier, while being better educated than their elders. They are not, however, being absorbed into employment at a faster rate. This has led to a spike in youth unemployment.     

EVALUATING THE GENERAL EQUILIBRIUM EFFECTS OF A WAGE SUBSIDY SCHEME FOR SOUTH AFRICA

Unemployment among semi‐ and unskilled labour has reached severe proportions (over 50%) and threatens the political and economic stability of the South African economy. In this paper a computable general equilibrium (CGE) model of the South African economy is used to assess the effectiveness of a wage subsidy in raising employment of semi‐ and unskilled workers. We find that employment of semi‐ and unskilled workers can be raised quite significantly. Further, the wage subsidy schemes compares favourably with alternative welfare grant schemes in terms of employment growth. However, the results are sensitive to the targeting of sectors and the substitutability between labour of different skill levels.     

IS THERE EVIDENCE OF A WAGE PENALTY TO FEMALE PART‐TIME EMPLOYMENT IN SOUTH AFRICA?

In this paper, we investigate female part‐time employment in South Africa. Using household survey data for South Africa from 1995 to 2004, we show that women are over‐represented in part‐time employment, and that the growth in part‐time work has been an important feature of the feminisation of the labour force. In contrast to many studies of part‐time work in other countries, however, we find evidence of a significant wage premium to female part‐time employment. The premium is also robust to fixed effects estimations using Labour Force Survey panel data from 2001 to 2004, where controlling for unobservable differences increases its size. The premium persists with different hourly thresholds defining part‐time employment and when we account for possible reporting errors in hours worked.     

SOCIAL NETWORKS AND ETHNIC NICHES: AN ECONOMETRIC ANALYSIS OF THE MANUFACTURING SECTOR IN SOUTH AFRICA

This paper analyses the link between social networks and ethnic occupational niches in the manufacturing sector in South Africa. To this end, it employs the methodology of Bertrand et al. to minimise the omitted variable bias induced by standard approaches investigating network effects and adopts Model's concentration index to define an ethnic niche. The results indicate that 25% of the sample is employed in ethnic niches in the manufacturing sector, but that niche employment varies markedly by language group. In addition, certain language groups tend to be clustered in advantageous niches where monthly income and skill levels are relatively high, while others occupy disadvantageous niches where monthly income and skill levels are relatively low. A number of different econometric specifications find strong evidence of social network effects. This highlights the role that these networks play in forming ethnic niches in the manufacturing sector in South Africa.     

INFORMALIZATION OF INDUSTRIAL LABOR IN INDIA: EFFECTS OF LABOR MARKET RIGIDITIES AND IMPORT COMPETITION

Since the 1980s, industrial labor in India has been increasingly informalized, manifested in a rising share of unorganized sector employment and the growing use of temporary and contract workers, and subcontracting in organized manufacturing. Using unit‐level data from the National Sample Survey employment–unemployment survey for 2004–5, the paper investigates econometrically whether labor market rigidities and import competition have been responsible for the informalization of industrial labor in India. The results of econometric models show that labor market reforms tend to increase the creation of regular jobs, while import competition tends to raise casual employment among workers with education levels above primary.     

ON THE MOTHER AND CHILD LABOR NEXUS UNDER CREDIT CONSTRAINTS: FINDINGS FROM RURAL INDIA

There is an emerging consensus that lack of credit is a major cause of child labor and inequality in the intrahousehold distribution of resources. At the same time, patterns in how children spend their time appear to be strongly influenced by maternal employment decisions. This paper includes an assessment of the effect of credit constraints on maternal employment and that of maternal employment on the intrahousehold allocation of labor, a nexus which has been left unexplored by existing studies. Three findings emerge: (1) a mother is more likely to work outside when a household lacks resources, and her domestic labor can be easily replaced by other members, (2) credit market accessibility is one of the major determinants of maternal labor, and (3) elder daughters assume a large part of the burden of maternal employment by providing domestic labor. Under binding credit constraints, results of this study support the collective as opposed to the unitary model of households.     

IMPACTS OF TRADE LIBERALIZATION ON EMPLOYMENT IN VIETNAM: A SYSTEM GENERALIZED METHOD OF MOMENTS ESTIMATION

Using a system generalized method of moments model, the present paper investigates the impacts of trade liberalization on employment in Vietnam from 1999 to 2004. The results show that the increase in industrial output increased labor demand, whereas the increasing wage rate led to a decline in the employment level. The impact of export expansion on derived labor demand was positive and statistically significant, indicating that the higher level of exports than previously presented employment opportunities for the country's large labor surplus. As far as imports are concerned, empirical observations indicate that imports did not necessarily negatively impact Vietnam's employment level.     

DEVELOPING EMPLOYMENT EFFECTS OF INNOVATIONS: MICROECONOMETRIC EVIDENCE FROM TAIWAN

This paper aims to identify the effects of innovation on employment and labor composition in Taiwan. Using a new and detailed firm‐level data set, the empirical results determine that innovations, measured by R&D investments or patent counts, have a positive impact on employment. Both of the estimated employment effects of product and process innovations are overall significantly positive. Although the effects of process innovations differ between high and low R&D‐intensive industries, the process innovation tends to expand the firms’ output and then increase employment for high R&D‐intensive industries. However, it frequently results in laborsavings in terms of production work and reduces jobs in low R&D‐intensive industries. Moreover, technological innovations are found to be non‐neutral, leading to a shift in labor composition in favor of skilled and more educated workers.     

HOW LARGE IS THE PRIVATE SECTOR IN AFRICA? EVIDENCE FROM NATIONAL ACCOUNTS AND LABOUR MARKETS

In recent years, the private sector has been recognised as a key engine of Africa's economic development. Yet, very little is known about its size and characteristics. We present novel estimates for 50 African countries and show that the private sector accounts for about two thirds of total investments, four fifths of total consumption and three fourths of total credit. Countries with small private sectors include a sample of oil exporters and some of the poorest countries in the continent. Surprisingly, the size of the private sector does not appear to be significantly correlated with growth performance. Labour market data reinforce the idea of a large private sector, which provides about 90% of total employment opportunities. However, most of this labour is informal and characterised by low productivity: permanent wage jobs in the private sector account on average for only 10% of total employment. South Africa is the notable exception, with formal wage employment in the private sector representing 46% of total employment. Finally, we find evidence of negative private sector earning premiums (?13% on the average), suggesting that market distortions abound. These are likely to prevent the efficient allocation of human resources and to reduce the overall productivity of the African economies.     

Income Disparity among Persons with Disabilities,Assessed by Education and Sex: Accentuated Gender Difference Found in Metro Manila,the Philippines

How do persons with disabilities (PWDs) earn a living? This paper presents an investigation of the economic activities of PWDs in the Philippines, where, among developing countries, disability‐related legislation is relatively progressive. In 2008, a field survey was conducted in cooperation with Disability People's Organizations using a tailor‐made questionnaire in Metro Manila. The explanatory variables of income of PWDs were examined using Mincer regression. The conclusions are as follows. (1) There is remarkable income disparity among PWDs, differing with education and sex. (2) After controlling for PWDs' characteristics, it was found that female PWDs are likely to earn less than male PWDs. Such a significant income gap between men and women among PWDs is remarkable in the Philippines, where gender difference in income is generally small. This finding suggests that female PWDs are doubly disadvantaged in earning income.     

FROM MANUFACTURING ZONE TO LIFESTYLE PRECINCT: ECONOMIC RESTRUCTURING AND SOCIAL CHANGE IN INNER MELBOURNE, 1971–2001

Deindustrialisation, decline in manufacturing employment, gentrification, and the regeneration of inner urban areas characterized the experiences of many Western cities during the late twentieth century. In North America and Europe, economic and urban historians have studied these profound changes, but not so in Australia. This paper charts the decline of manufacturing in Melbourne's inner suburbs in the 1970s and 1980s and its replacement by, firstly, small-scale manufacturers catering to local niche markets, and later by ‘warehouse-style’ residential development.     

EXCHANGE RATES AND EMPLOYMENT

The analysis of exchange rates and employment has received scant attention in development economics. This is surprising, since there appears to be a number of well-defined transmission channels through which exchange rates impact on employment. In South Africa this is particularly important given the rand's higher volatility relative to other emerging economies. The main focus of this paper is to give an overview of the transmission channels through which exchange rates affect employment and to discuss the standard methodological approach to conceptualising the impact of exchange rates on employment. Given the sector-specific impact of exchange rates which are conditioned by industry characteristics, such as the degree of external orientation, there will always be winners and losers in the face of a currency shock. This means the full impact of exchange rates on employment can only be dealt with in an economy-wide framework. Results from a computable general equilibrium (CGE) model are presented to demonstrate that even in a country with unreliable employment data such as South Africa, one can still analyse exchange rate and employment issues.