Connecting capabilities in highly unequal developing countries: The case of the Square Kilometre Array telescope in South Africa

ABSTRACT

Innovation and skills development require interactive capabilities to function effectively. Interactive capabilities mediate between skills supply and skills demand actors in an innovation system, and in the knowledge economy more broadly. This article investigates such interactive capabilities, and the manner in which they facilitate labour market alignment. Within a case-study focus on the Square Kilometre Array (SKA) telescope in South Africa, we investigate how organisational capabilities, structures, and mechanisms facilitate or constrain interaction between the SKA and its network partners, including universities, firms, intermediaries, and a technical college. This illustrates how pockets of excellence within an unequal South African skills and innovation landscape were effectively connected in order to build a critical mass of skills and technologies that were highly competitive on the international stage. This shows how, in highly unequal developing countries, interactive capabilities form a lever for access to the global science and technology frontier.     

The changing nature of artisanal work and occupations: Important for understanding labour markets

ABSTRACT

The social and political conditions within which artisans are required to work have shifted globally. The South African policy concern is to train bigger quantities and improve artisanal skills quality, while simultaneously providing more opportunities for young, black and women artisans. A concern for academia is how this shifting milieu will impact on our understanding of artisanal work and occupations and what implications should this have for further research. Using the concept of occupational boundaries, we investigate, at a micro level, real and perceived change to work in three artisanal trades. The study shows that while some elements have changed, the division of labour reinforces the traditional scope of artisanal work in relation to other occupational groups. The findings reconfirm the complex relationship between changes to work and the demand for skills, and importantly highlight the sociology of work as a critical but undervalued dimension in labour market analysis.     

The implications of South Africa's skills migration policy for country competitiveness

South Africa suffers from a shortage of skills, while at the same time having an excess of unskilled labour. The brain drain and the impact of HIV/Aids are threats to the current skills level in the labour force. Skilled workers generally create jobs for unskilled workers, and the level of skills in the labour force is an attraction for foreign investment. The new international migration policy imposes financial penalties and other restrictions on employers of foreigners with skills. The policy is detrimental to South Africa's competitiveness in the global economy and will deter investors and those needing to utilise skills not available in the South African labour market. A general immigration policy would be more appropriate to attract skilled foreigners to South Africa, where their skills can be absorbed into the labour force by supply and demand forces.     

Quantifying shifts in primary factor demand in the South African economy

This article uses a dynamic computable general equilibrium model to explain the persistence in the high levels of unemployment in the South African economy in spite of modest to relatively strong output growth. We make use of a historical simulation for the period 2006–13 and find that the capital–labour ratio increased despite a relative increase in the rental price of capital. Classical economic theory suggests that changes in industry preferences toward capital and labour lead to adjusted capital–labour ratios. We quantify the changes in industry factor preferences during this period and highlight their impact in explaining observed labour market outcomes. Other changes in the economy over this period are also quantified.     

Higher education,employment and economic growth: Exploring the interactions

ABSTRACT

This article interrogates the impact and nature of South Africa’s post-apartheid economic growth performance through the lens of human capital investment with a particular emphasis on higher education. The South African economy has been characterised by a skills-biased trajectory, ensuring jobs for the better educated. By differentiating between tertiary and vocational training, we find that further education and training (FET) graduates are almost as likely to be employed as school leavers without higher education. We analyse the extent to which the educational attainments of labour affect the nature and trajectory of economic growth in South Africa, by estimating Olley and Pakes’ two-stage regression on a modified Cobb–Douglas production function. The results indicate that the degree cohort contributes to economic growth whilst other higher education institutions, including FET colleges, do not productively contribute to economic growth.     

Utilisation of administrative and research databases in government departments: Providing the platform for skills planning

ABSTRACT

A high-level audit of administrative databases was conducted in more than 20 national government departments or entities. The aim was to investigate the relevance of datasets within these databases to skills planning by the government aimed at harmonising skills supply and demand in South Africa. The audit revealed that datasets have different levels of relevance and usability. There are datasets that: are relevant and immediately usable; are highly relevant and require some preparation; contain relevant variables but are currently undergoing validation and cleaning before they can be utilised; and are in an early stage of evolution. Based on these observations, the authors furthermore explore how databases can be understood from an evolutionary perspective. This investigation provides evidence that, in the field of skills planning, the government is progressing through the early phases of e-government systems development by cataloguing data resources and preparing for transactions between data users and providers.     

Is Structural Change Speeding Up? The Case of Sweden, 1850–2000

Abstract

This article focuses on the importance of structural change on productivity growth and conditions in the labour market. From a productivity perspective, a positive relation is found between structural change and productivity growth from the industrial breakthrough until the first oil crisis. From the early 1970s, this positive relation weakened and eventually became negative as labour moved from high to low productive industries. From a labour market perspective, it is found that extent of sectoral reallocation of labour has become more intense over the twentieth century. The extent of job gains and losses seems to have been more intense during the postwar period than during the industrialization phase.     

Public works programme and primary health care in South Africa: Creating jobs for health systems strengthening?

This paper examines employment and skills training for community caregivers within the expanded public works programme in South Africa. The paper argues that, as currently conceptualised, the skills and learnership programmes for community caregivers fail to take full advantage of the prevailing labour market realities. Therefore, the paper argues for strategic reconceptualisation of the programme to include learnerships for community caregivers that impart more mid-level to higher-level skills to meet current and future labour market demands particularly in primary health care. This, it is argued, will address the scarcity of skills in the health sector of the economy. Furthermore, the proposed programme will simultaneously have positive impacts on unemployment, the primary health care system and the socio-economic well-being of community caregivers.     

Does Human Capital Protect Workers against Exogenous Shocks? Evidence from Panel Data on South Africa during the 2008‐2009 Crisis

The financial and economic crisis of 2008 and 2009 took a heavy toll on the South African economy. The economy contracted for the first time since 1998 and entered recession during the fourth quarter of 2008. The gross domestic product contraction was soon transmitted to the labour market. Between the second quarters of 2008 and 2009, employment fell by 3.8%. However, not all individuals were hit with the same intensity. Using panel data from a quarterly labour force survey unique in the African context, we find that human capital (i.e. education as years of schooling and workforce experience) provided a buffer against the shock. After controlling for observable characteristics, education and experience showed the potential to entirely offset the effect of the recession on the likelihood of employment. This has important policy implications, as it strengthens the case for strategic investments in human capital and helps identify the unskilled as having the greatest need for social safety net interventions during a recession.     

Trade‐Induced Unemployment: The Case of Post‐Apartheid South Africa

This paper analyses the link between changes in trade flows and labour demand in post‐apartheid South Africa (1994–2006). Although this is not the first research with regard to this topic, it is one of the few that uses a consistent trade framework. Based on a three‐dimensional Heckscher–Ohlin trade model, a theoretical framework is constructed to analyse this link. Whereas it is impossible to test the theoretical link directly because of data limitations, an indirect econometric test supports the findings of the model. This implies that the combination of increased trade and labour market rigidities was unfavourable for labour opportunities.     

Skill Accumulation in the Search Unemployment Model

ABSTRACT

I analyze general skill accumulation (training) and its financing among labor market entrants in a search unemployment equilibrium. Becker's general skill finance rule is modified for a search economy: although skill accumulation is associated with a hold-up problem, since it benefits future job vacancies which workers expect to be matched with, if vacancies direct their search to workers of different skill levels, workers internalize this externality. An extended model analyzes whether to accumulate skills through training or education. Small differences in the relative cost of acquiring education can lead to large differences in skill levels in the labor market.     

Barriers to Skills Development in a Local Construction Labour Market

The literature on the construction industry suggests that the structure of labour markets in that industry sets up barriers to skills development. It is often suggested that 'employer engagement', leading to increased 'buy-in' into skills development, and investment by employers is the way to overcome these barriers. We present an example from a local labour market in South East England, with reference to an intervention in training ('Constructing Futures') that has brought private and public sector actors together. This example shows that employer engagement on its own is not sufficient to overcome the barriers created by the labour market structure. We suggest some essential measures to allow more workers to enter the industry and gain skills and reduce the skill shortages endemic to the industry in South East England.     

South African social security under apartheid and beyond 1

Under apartheid, the trappings of a welfare state for whites were created. Over time, social security was gradually extended to other groups, and recently social assistance benefits were equalised. This left South Africa with high social security levels for a middle‐income developing country. However, the social security system still largely reflects the historical needs of vulnerable white groups under apartheid, among whom unemployment was minimal, given their preferential access to jobs and education. Thus the social security system now has inadequate provision for the most vulnerable, the unemployed. In contrast, four out of five pensioners receive a means‐tested social pension — a major poverty‐alleviating factor in rural black communities. This article analyses the social security system against the backdrop of apartheid and the more recent democratisation, and assesses its major deficiencies, the forces acting for its expansion and the binding fiscal constraint.     

Reinterpreting the convict labour market

The convicts transported to NSW between 1817 and 1840 were young, fit, highly literate and brought occupational skills which were broadly representative of the British and Irish working classes. In the colonial labour market where convicts were coerced, more labour was forthcoming and at a lower wage than in a free labour market. The assignment of convict labour in the colony was efficient; skilled urban and construction tradesmen were employed in the same jobs in NSW as they had held in Britain. Domestic servants and unskilled urban workers whose skills were not suited to the needs of the colony experienced job restructuring. The organization of convict workers into teams and gangs in Australia was similar to the way work was organized in free labour Britain, and a mbc of incentives and rewards characterized the extraction of work from convicts. The human capital of the transportees and the labour system within which they worked help to explain the rapid growth of the colonial economy before 1840.     

The Rising Supply of College Graduates and Declining Returns for Young Cohort: The Case of Korea

Abstract

This study analysed the effect of an increase in the supply of youth college graduates, in terms of the return on education. The rate of return on education in Korea substantially dropped from 1983 to 1994. Since then, however, the declining trend of the rate of return on education stopped and turned upward. The rate of return has declined especially for college graduates, and such a decline has been most prominent for young cohorts, among college graduates, since 1987. The observed trend of the rate of return appears to be related to the sharp increase of labour supply of college graduates since the mid 1980s.

The elasticity of substitution between education levels and age groups was estimated in this study, using a generalized demand-supply model. The effects of relative supply of college graduates (as a whole and by age) on the relative wages of college graduates by age were analysed under the assumption of constant skill-biased technological change. As it turned out, the relative college graduates’ labour supply of each age group had large bearings upon relative wages of each corresponding group, while the relative labour supply of all college graduates did not. It implies that labour is an imperfect substitute, not only between education levels but also between age groups.

Thus, as youth college graduates’ supply increases, there needs to be a corresponding demand increase for them, to avoid the drop in the wage or employment level for them. Therefore, to tackle with the issues of youth labour market, such as youth unemployment, separate policies targeting the youth group are called for.     

A Tale of Two Countries and Two Stages: South Africa,China and the Lewis Model

The paper compares the economic progress of two countries, South Africa and China, in relation to the Lewis model. These economies are chosen because they have interesting similarities and also interesting differences. At the start of economic reform in China and with the advent of democracy in South Africa, both countries had surplus labour: they were at the first, labour-surplus, stage of the Lewis model. It is shown that, since then, South Africa has continued to experience surplus labour: the unemployment rate has risen. By contrast, China’s labour market is shown to have tightened, and there is evidence that China has entered the second, labour-scarce, stage of the Lewis model. The difference lies in their growth rates. There are sections explaining why the South African economy has grown slowly and why the Chinese economy has grown rapidly, in relation to the growth of their labour forces. The Lewis model provides an enlightening framework for explaining how widely the fruits of economic development can be shared.     

China’s expansion of higher education: The labour market consequences of a supply shock

In the decade 1998–2008 China expanded enrolment in higher education almost six-fold. For the examination of its short term labour market consequences, this unprecedentedly huge and sudden policy change might be regarded as a natural experiment. After providing a theoretical framework for analysis, the paper uses urban labour market surveys to analyse how the labour market adjusted to the supply shock. Three outcomes are examined: the effect of the expansion on wages, on unemployment, and on access to ‘good jobs’. The shock is found to reduce relative wages, raise the unemployment rate, and reduce the proportion in good jobs, but only for the entry-year or entry-period cohort of graduates. The effect is fairly powerful for entrants, especially university rather than college graduates, but incumbent graduates are largely protected from the supply shock. An attempt is made to examine the labour market effects of the quantitative expansion on educational quality. The paper provides insight into the operation of China's labour market in recent years.     

Engineer training in Sweden during the postwar period in the context of technical and structural change

Abstract

A predilection for far-reaching social planning has been the norm in Sweden for most of the postwar period. During the Second World War, for example, planning ideas were developed by Swedish economists and officials (most of them associated with Social Democratic circles) serving on the Myrdal Commission, as it was called.1 Many of these ideas turned up subsequently in the labour movement's postwar programme and were implemented to some extent during the 1950s and 1960s. In this way a kind of supply economy came into operation. Many prominent Swedish economists became heavily involved in the work of forecasting and planning, in which oneimportant planning aim was the avoidance of structural problems. The end in view, in other words, was to plan in such a way that mutually complementary combinations of productive resources were to hand at every given point in time. Manpower forecasts and socio-economic ‘long-term planning commissions’ were some of the instruments that came to.be employed.