Phillips ‘loops’ in South Africa∗

Professor Phillips published his famous Phillips curve article in 1958. In his research, however, he observed that wages were rising more rapidly during the upswing of the business cycle, when unemployment was falling, than during the downturn, when unemployment was rising. When data on the respective variables was plotted, a distinct ‘loop’ was found. In the analysis of South African labour statistics, it was found that such a ‘loop’ existed in the White labour market. However, in the case of the Black labour market, only a weak image of a ‘loop’ was found. The real economic forces producing such a ‘loop’ were almost completely absent. This has implications not only for labour management and economic policy in general, but also for development strategies, because it implies that if Black labour had been left to market forces only, they would have been worse off than they are now.     

咸阳市失业问题研究

在经济发展的过程中,失业现象总是会存在,但过高的失业率会带来一系列社会问题。咸阳市位于陕西省八百里秦川腹地,紧邻西安,经济发展具有一定的优势,但近几年失业问题也日趋严重。导致咸阳市失业人员迅速增长、失业压力大的原因既与我国的具体国情和近几年经济发展相关,也有咸阳市的失业管理体制因素。解决咸阳市的失业问题也要从发展经济和完善管理体制两个方面着手。     

Technology and employment in the production of cotton cloth

This paper makes use of two well-known UN studies of the integrated spinning and weaving of cotton cloth in order to examine the relationship between technology and employment in developing countries. In particular the paper: (a) considers the choice of technology in the production of a given volume of cotton cloth in Western Europe, Latin America and Africa; (b) estimates and discusses the elasticity of capital-labour substitution in such production: and (c) examines some aspects of job creation, factor prices and economic efficiency. The variation in ‘optimal’ technology choice across wage areas is found to be rather narrow and to lie in the upper part of the capital-labour spectrum. The variation in profitability across technologies, however, is found to be much less than that of employment in all three areas. The limited range of ‘optimal’ technologies is partly explained by the elasticity of substitution which lies between 0.2 and 0.25 for Europe; 0.25 and 0.33 for Latin America; and 0.33 and 0.50 for Africa. A certain prodigality in the use of both men and machines in the developing regions is also part of the explanation of the relative similarity in optimal technology choice in the three wage areas considered. In the light of this prodigality and the low elasticity, consideration is given to the question of increasing developing country employment in a state enterprise and a private firm respectively. Not surprisingly, it is found that it would pay to exploit the scope for substitution in the state factory if more employment were sought, although the difference in total costs by ignoring such scope could be relatively small. It is further found that the magnitude of factor price changes required to induce a profit-maximizing businessman to provide the required volume of employment could be dauntingly large. It is noted that increased efficiency in the developing textile industry could result in increased unemployment.     

What can we expect from subsidies for the long-term unemployed?

What can we expect from subsidies for the long-term unemployed? According to Snower (1994a) unemployment would fall dramatically. Furthermore, the subsidy scheme would pay for itself. In this paper we argue that the impact on unemployment is more likely to be limited and is unlikely to constitute a ‘free lunch.’ We present an adapted version of MIMIC where we model the distinction between short and long-term unemployment explicitly. Simulation results on subsidies for the long-term unemployed are in line with the findings of microlevel studies on actually implemented subsidy schemes for the long-term unemployed. The simulation results are in contrast with Snower's analysis.     

Revisiting unemployment levels and trends in South Africa since the transition

Many recent studies compared the 1995 October Household Survey (OHS) with the latest available Labour Force Survey (LFS) to derive the unemployment ‘trends’ in South Africa since the transition, but this approach only gives a snapshot of unemployment at two points in time. Although the better approach is to examine all available labour surveys to derive the real unemployment trends during the period, this does not mean these trends are fully reliable and comparable, as the sampling method, weighting technique, questionnaire design and labour market status derivation methodology to define the unemployed are different across the surveys. In particular, the unemployment estimates in OHS 1995–99 and during the changeover between OHS and LFS in both narrow and broad terms increased rapidly. This paper aimed to address these issues, if possible, in order to improve the comparability and reliability of unemployment aggregates across the surveys.     

Labour Market Flexibility,Wages and Incomes in Sub‐Saharan Africa in the 1990s

Abstract: This paper provides an overview of how African labour markets have performed in the 1990s. It is argued that the failure of African labour markets to create good paying jobs has resulted in excess labour supply in the form of either open unemployment or a growing self‐employment sector. One explanation for this outcome is a lack of labour market ‘flexibility’ keeping formal sector wages above their equilibrium level and restricting job creation. We identify three attributes of labour market flexibility. First, whether real wages decline over time; secondly, the tendency for wages to adjust in the face of unemployment; and thirdly, the extent of wage differentials between sectors and/or firms of various size. Recent research shows that real wages in Africa during the 1990s may have been more downwardly flexible than previously thought and have been surprisingly responsive to unemployment rates, yet large wage differentials between formal and informal sector firms remain. This third sense of the term ‘inflexibility’ can explain a common factor across diverse African economies — the high income divide between those working in large firms and those not. Those working in the thriving self‐employment sector in Ghana have something in common with the unemployed in South Africa — both have very low income opportunities relative to those in large firms.     

Lessons from historical monetary unions - is the European monetary union making the same mistakes?

This article examines three historical monetary unions: the Latin Monetary Union (LMU), the Scandinavian Monetary Union (SMU), and the Austro-Hungarian Monetary Union (AHMU) in an attempt to derive possible lessons for the European Monetary Union (EMU). The term ‘monetary union’ can be defined either narrowly or broadly depending on how closely it conforms to Mundell’s notion of ‘Optimal Currency Area’. After examining each of the historical monetary unions from this perspective, the article concludes that none of them ever truly conformed to Mundell’s concept, nor does the EMU. Nevertheless, the article argues that some lessons may be learned from these historical experiences. First, it is necessary that there exist robust institutions such as a common central bank and a unified fiscal policy in order to withstand external shocks. The three early unions could not withstand the shock of WWI. Another important lesson is that continuing national rivalries can undermine any monetary union.     

The origins of structuralism

Starting out from I. M. D. Little's recent categorization of development economics as ‘neo-classical versus structuralist’, this article makes three points. First, it traces the origins of structuralism in this broad sense in the emergence of the doctrine of market failure in England during the 1930s and 1940s. Secondly, it indicates the links between this line of thought and the Latin American structuralist theory of inflation. Finally, it takes up W. A. Lewis's suggestion that the severity of the inflation problem in Chile was due not so much to structural factors which it had in common with much less inflation-prone LDCs but rather to the strength of organized interest groups making competing income claims.     

Malthus and gender

This article re-reads Malthus's Essay on the Principle of Population for his explicit discussion of men and women, masculinity and femininity. A feminist reading is possible, but not undertaken here. Rather, the purpose is simply to demonstrate how ‘gender’ was Malthus's own object of inquiry. Historical actors, perhaps especially economic thinkers, often considered gender far more fully and explicitly than almost all subsequent analysts of them. It therefore remains not just insufficient, but empirically erroneous not to inquire into how ‘men’ and ‘women’ were considered, constructed, instructed, symbolised or valued by the historical actors we study, including those in the political economy canon.     

Who are Those Misclassified As ‘Others’? A Note on Indonesian Labour Force Statistics 1

This paper examines possible kinds of misclassification of those placed in the large ‘others’ group in Indonesian labour force statistics, i.e. people registered as outside the labour force and neither attending school nor homemaking. It argues that a large proportion of those classified as ‘others’ are unemployed, unpaid workers and people attending informal education, as well as those in transition between two educational institutions. The paper discusses possible reasons for the remarkable differences between Census and labour force surveys in the reported size of the ‘others’ group, and considers the consequences for statements on trends in open unemployment if adjustment is made for the high ‘others’ share.     

THE ECONOMIC CONSEQUENCES OF HARVESTER

A century has elapsed since the ‘New Protection’ policy of the newly established Commonwealth government of Australia gave birth to the ‘basic wage’ principle following the ‘Harvester’ judgement. This paper re‐examines, with special reference to economic considerations – unemployment, the tariff, and the wage structure – the controversy surrounding the initial formulation of this principle and the evolution of its application under the federal wage fixing tribunals and the legislation under which they operated. It concludes that even the vestigial remains of the concept underlying Harvester have progressively disappeared from Australian wage fixing principles.     

Contested land tenure reform in South Africa: experiences from Namaqualand

In South Africa the distribution of land rights remains a major manifestation and cause of injustice, only slowly affected by the constitutionally mandated programme of land restitution, redistribution and tenure reform. The Transformation of Certain Rural Areas Act 94, 1998 (Trancraa) is the first post-apartheid legislation to reform ‘communal’ land tenure. It applies to 23 former ‘coloured rural areas’ and was introduced in six areas in Namaqualand in the Northern Cape Province during 2001–2. In a different, contested process a Communal Land Rights Bill for the former ‘homelands’ was published in August 2002, adopted by Cabinet in 2003 and signed into law in July 2004. While the Communal Land Rights Act relies on ‘traditional councils’ with a majority of non-elected members, Trancraa was enacted in the context of the 1997 White Paper of South African Land Policy and focused on community choice and the role of municipalities. The consultative process in Namaqualand was driven by civil society organisations and community actors, but did not include the training, finance and development support needed to transform rural relations among people affected by unemployment, land scarcity and weak local organisations. To promote procedural and substantive justice, tenure reform must honour the human rights of equality, redress and land development support articulated in land policy and the Constitution.     

Unemployment in Latin America and the Caribbean

This study constructs a new data set on unemployment rates in Latin America and the Caribbean and then explores the determinants of unemployment. We compare different countries, finding that unemployment is influenced by the size of the rural population and that the effects of government regulations are generally weak. We also examine large, persistent increases in unemployment over time, finding that they are caused by contractions in aggregate demand. These demand contractions result from either disinflationary monetary policy or the defense of an exchange-rate peg in the face of capital flight. Our evidence supports hysteresis theories in which short-run changes in unemployment influence the natural rate.     

Trajectories of social protection in Africa

Social protection in contemporary Africa is the product of several strands of social policy, from European social security systems to humanitarian relief interventions. Contributory social security mechanisms such as unemployment insurance and pensions were imported to Africa during the colonial period, but cover only a minority of formally employed workers. Food aid alleviates hunger but does not resolve problems of chronic food insecurity. Cash transfers are being promoted as an alternative to food aid, but have been criticised for being ineffective against price inflation and underwriting neoliberal economic policies. Some programmes link social transfers to public works employment and microfinance, with the aim of ‘graduating’ participants off social protection. This article argues instead for a ‘social contract’ approach – recognising the right to social protection, empowering passive beneficiaries to become entitled claimants, and introducing social audits to hold duty-bearers accountable for effective and equitable delivery of citizen-driven social protection policies.     

Unemployment and Economic Policy in Denmark in the 1930s

Abstract

The paper examines Danish unemployment and the employment policy in the 1930s. The unemployment data indicate that though the unemployment increased dramatically the rate of unemployment remained low. The official Danish unemployment records definitely underestimated the actual unemployment in the early 1930s, but the discrepancy was hardly as big as some scholars have suggested. The paper furthermore points out that the rather atypical rise in the Danish unemployment from the mid-1930s can be attributed to a rise in the natural rate of unemployment due to an improved unemployment insurance coverage and a more comprehensive registration of the unemployment. The second part of the paper deals with the Danish employment policy. Unemployment remained high on the political agenda, but the employment problem never became the main target for the economic policy. An active employment policy was constrained by the problems of the balance of payments and the political disagreements in parliament. While the macroeconomic policy did help to stabilize the economy and the employment, the number of measures directly targeting the labour market was small, and they seldom gave rise to much job creation.     

New evidence on subjective well-being and the definition of unemployment in South Africa

Access to new nationally representative, individual-level panel data from South Africa has allowed for the revalidation of Kingdon and Knight's discussion on the definition of unemployment. This paper investigates subjective well-being as a measure of comparison between labour-market statuses. It finds that on the grounds of subjective well-being the non-searching unemployed (or ‘discouraged’) are significantly worse-off than the not economically active. Moreover, evidence suggests that, with regard to the relationship between life satisfaction and labour-market status, the non-searching unemployed consistently are the worst-off. This is especially true of both the young and senior non-searching unemployed; however, the findings are largely driven by the African subsample. This paper does not advocate for a change in the official definition of unemployment but does advocate for the inclusion and recognition of the non-searching unemployed in policy relating to labour and development in South Africa.     

Aiding self‐employed car‐washers in the informal sector in Durban

In the past year, the South African Government has committed itself to ‘developing’ the informal sector as a strategy to ease the unemployment crisis and to aid the underemployed. In this paper, the author examines both the lives of self‐employed car‐washers and car‐washing as an activity within the informal sector. He argues that many ‘marginalised’ people who eke out a subsistence in the lower echelons of the informal sector in South Africa regard themselves as lumpenproletariat (or ‘wage‐labourers‐in‐waiting') and not dynamic entrepreneurs. These people expect the Government to intervene in the process of their transition to proletarianism. Further, activities such as car‐washing offer no prospects for self‐advancement.     

Basic needs: The case of Sri Lanka

This article has two related objectives: to judge Sri Lanka's success in meeting its ‘basic needs’ and growth objectives, and to use Sri Lanka's experience to cast light on general hypotheses regarding basic needs. The analysis suggests that Sri Lanka's social expenditures had a substantial cost in growth and unemployment. However, largely because of these social programmes, it has the best social indicators, compared to its income, of any country for which data are available. Its growth has, surprisingly, been above average for low-income countries. Implications for basic-needs programmes include the need to ‘target’ social programmes, the high priority of primary education and the potential high impact, but also high costs, of assuring minimum caloric intakes.     

China’s macroeconomic trends in downward pressures: the ‘micro stimulus’ effects and steady growth

This study reports China’s macroeconomic trends in downward pressures and discusses the effects of the ‘micro stimulus’ on the growth performance of Chinese economy. It appears that economic growth rebounds significantly in the short term every time ‘micro stimulus’ is applied, but the economy slows down again once the stimulus dwindles. China’s economic growth thus exhibits a pattern of significant ‘stimulus-dependence’. When facing economic downturn, China has only resorted to stimulus policy to sustain growth. Not surprisingly, our findings indicate that ‘micro stimulus’ cannot realize the strategic intent of growth stabilization and structural adjustment, and may even lead to more structural chaos. One problem that can be attributed to the near-sighted strategy is the worsening productivity performance since the financial crisis of 2008. Therefore both improvement in social security systems and social programs designed for maintaining long run growth are needed in order to improve productivity performance on the one hand and to facilitate structural adjustments on the other.