Advanced Search
MyIDEAS: Login to save this paper or follow this series

The Impact of Privatisation and Regulatory Reform on Wage Premia in State-Owned Enterprises in South Africa

Contents:

Author Info

  • Damian Hattingh
  • James Hodge
  • Sandrine Rospabé

    ()
    (Development Policy Research Unit, University of Cape Town)

Registered author(s):

    Abstract

    Whilst much has been said about the employment effects of the privatisation of state-owned enterprises in South Africa, the debate has largely overlooked the impact of these events on the wage levels of those workers that retain their jobs in the restructuring process. This paper estimates earnings functions for workers in the South African economy to determine the impact of these changes. The results suggest that those workers that do retain their jobs in the restructuring process will be better off initially. This is because the state-owned firm will shift to become a partially private firm that operates in a highly regulated industry structure with limited competition. This enables the firm to earn abnormal profits and unionised labour is able to share in some of these profits. However, uncertainty at the individual level over whether they will be one of the lucky workers to retain their post will ensure that most workers will oppose any restructuring. The paper also demonstrates that any further liberalisation of the previously state-owned sector to introduce greater competition will make those workers worse off as their premium is eroded along with the abnormal profits. This applies as much to union members and non-union members. The result is that workers can be expected to oppose any further restructuring of these former state-owned firms after they have been initially reformed.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.dpru.uct.ac.za/sites/default/files/image_tool/images/36/DPRU%20WP03-078.pdf
    File Function: First version, 2003
    Download Restriction: no

    Bibliographic Info

    Paper provided by University of Cape Town, Development Policy Research Unit in its series Working Papers with number 03078.

    as in new window
    Length: 20 pages
    Date of creation: Jul 2003
    Date of revision:
    Publication status: Published in Working Paper Series by the Development Policy Research Unit, July 2003, pages 1-20
    Handle: RePEc:ctw:wpaper:03078

    Contact details of provider:
    Postal: Private Bag X3, Rondebosch, 7701
    Phone: +27 21 650 5705
    Fax: +27 21 650 5711
    Email:
    Web page: http://www.dpru.uct.ac.za
    More information through EDIRC

    Related research

    Keywords: South Africa: privatisation of state-owned enterprises; earnings functions for workers;

    Find related papers by JEL classification:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Paul Collier & Jan Willem Gunning, 1999. "Why Has Africa Grown Slowly?," Journal of Economic Perspectives, American Economic Association, vol. 13(3), pages 3-22, Summer.
    2. Sandrine Rospabé, 2001. "Making Racial Wage Relations Fair in South Africa: A Focus on the Role of Trade Unions," Working Papers 01048, University of Cape Town, Development Policy Research Unit.
    3. Francis Teal, 1994. "The size and scources of economic rents in a developing country manufacturing labour market," Economics Series Working Papers WPS/1995-06, University of Oxford, Department of Economics.
    4. Richard A. Posner, 1971. "Taxation by Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 22-50, Spring.
    5. Rose, Nancy L, 1987. "Labor Rent Sharing and Regulation: Evidence from the Trucking Industry," Journal of Political Economy, University of Chicago Press, vol. 95(6), pages 1146-78, December.
    6. Butcher, Kristin F. & Rouse, Cecilia Elena, 2001. "Wage effects of unions and industrial councils in South Africa," Policy Research Working Paper Series 2520, The World Bank.
    7. George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring.
    8. Dorothe Bonjour, 2000. "Are civil servants paid too much? - A distributional analysis of the public-private wage gap in Switzerland," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 136(IV), pages 557-578, December.
    9. James M. Poterba & Kim S. Rueben, 1998. "Fiscal Institutions and Public Sector Labor Markets," NBER Working Papers 6659, National Bureau of Economic Research, Inc.
    10. Haroon Bhorat, 2000. "Wage premia and wage differentials in the South African labour market," Working Papers 00043, University of Cape Town, Development Policy Research Unit.
    Full references (including those not matched with items on IDEAS)

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:ctw:wpaper:03078. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Waseema Petersen).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.