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Unemployment in South Africa, 1995-2003: Causes, Problems and Policies

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  • Geeta Kingdon
  • John Knight

Abstract

This paper examines an issue of overwhelming importance in South Africa--unemployment and its rise. It explains the factors behind the sharp rise in unemployment in the post-apartheid period, investigates the role of labour legislation and the system of labour market governance, evaluates the impact of the government's active labour market policies, identifies the knowledge gaps about the functioning of the labour market and draws some policy prescriptions. It analyses unemployment using household surveys spanning 1995--2003 and explains the rise in unemployment by the slow growth of the economy, and thus slow growth in the demand for labour relative to the rapidly growing supply, together with labour market inflexibility. The paper argues that if unemployment is to be tackled, it is crucial to pursue a set of policies that promote South Africa's rate of economic growth to promote job-creation, and also that labour market regulations require reconsideration, giving greater weight to the concerns of employers and investors, and to the interests of the unemployed and informally employed poor who are beyond the reach of the labour institutions but can be hurt by them nevertheless. It highlights that lack of appropriate data hinders analysis of important aspects such as entry into, exit from and duration of unemployment. Finally, the paper appeals for investigation of how active labour market policies to address unemployment--such as public works programmes, skills training programmes etc., formulated largely in the absence of local evidence--have performed. Copyright 2007 The author 2007. Published by Oxford University Press on behalf of the Centre for the Study of African Economies. All rights reserved. For permissions, please email: journals.permissions@oxfordjournals.org, Oxford University Press.

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Bibliographic Info

Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number GPRG-WPS-010.

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Date of creation: 01 Jan 2005
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Handle: RePEc:oxf:wpaper:gprg-wps-010

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  1. Emanuela Galasso & Martin Ravallion & Agustin Salvia, 2004. "Assisting the transition from workfare to work: A randomized experiment," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 58(1), pages 128-142, October.
  2. Charles Meth & Rosa Dias, 2004. "Increases in poverty in South Africa, 1999-2002," Development Southern Africa, Taylor & Francis Journals, vol. 21(1), pages 59-85.
  3. Daniela Casale, 2004. "What has the Feminisation of the Labour Market ‘Bought’ Women in South Africa? Trends in Labour Force Participation, Employment and Earnings, 1995-2001," Working Papers 04084, University of Cape Town, Development Policy Research Unit.
  4. Geeta Kingdon & John Knight, 2001. "Race and the Oncidence of Unemployment in South Africa," Economics Series Working Papers WPS/2001-18, University of Oxford, Department of Economics.
  5. Murray Leibbrandt & James Levinsohn & Justin McCrary, 2005. "Incomes in South Africa Since the Fall of Apartheid," NBER Working Papers 11384, National Bureau of Economic Research, Inc.
  6. Anna McCord, 2004. "Policy Expectations and Programme Reality: The Poverty Reduction and Labour Market Impact of Two Public Works Programmes in South Africa," Working Papers 8, Economics and Statistics Analysis Unit (ESAU), Overseas Development Institute.
  7. Maloney, William F, 1999. "Does Informality Imply Segmentation in Urban Labor Markets? Evidence from Sectoral Transitions in Mexico," World Bank Economic Review, World Bank Group, vol. 13(2), pages 275-302, May.
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Cited by:
  1. Knight, John, 2007. "China, South Africa, and the Lewis Model," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  2. Pauw, Karl & Leibbrandt, Murray, 2012. "Minimum Wages and Household Poverty: General Equilibrium Macro–Micro Simulations for South Africa," World Development, Elsevier, vol. 40(4), pages 771-783.
  3. Olivier Bargain & Prudence Kwenda, 2009. "The Informal Sector Wage Gap: New Evidence Using Quantile Estimations on Panel Data," Working Papers 200916, Geary Institute, University College Dublin.
  4. Jeremy R. Magruder, 2010. "Intergenerational Networks, Unemployment, and Persistent Inequality in South Africa," American Economic Journal: Applied Economics, American Economic Association, vol. 2(1), pages 62-85, January.
  5. Chaudhuri, Sarbajit & Mukhopadhyay, Ujjaini, 2009. "Revisiting the Informal Sector: A General Equilibrium Approach," MPRA Paper 52135, University Library of Munich, Germany.
  6. Nicola Branson, 2009. "Re-weighting the OHS and LFS National household Survey Data to create a consistent series over time: A Cross Entropy Estimation Approach," SALDRU Working Papers 38, Southern Africa Labour and Development Research Unit, University of Cape Town.
  7. Sophie Mitra, 2008. "The Recent Decline in the Employment of Persons with Disabilities in South Africa, 1998-2006," Fordham Economics Discussion Paper Series dp2008-12, Fordham University, Department of Economics.
  8. Sophie Mitra, 2009. "Disability Cash Transfers in the Context of Poverty and Unemployment: the Case of South Africa," Fordham Economics Discussion Paper Series dp2009-08, Fordham University, Department of Economics.
  9. Paul Mosley, 2013. "Two Africas? Why Africa’s ‘Growth Miracle’ is barely reducing poverty," Brooks World Poverty Institute Working Paper Series 19113, BWPI, The University of Manchester.
  10. Olivier Bargain & Prudence Kwenda, 2009. "The Informal Sector Wage Gap: New Evidence Using Quantile Regressions on Panel Data," CEDI Discussion Paper Series 09-06, Centre for Economic Development and Institutions(CEDI), Brunel University.
  11. Szirmai, Adam & Gebreeyesus, Mulu & Guadagno, Francesca & Verspagen, Bart, 2013. "Promoting productive employment in Sub-Saharan Africa: A review of the literature," MERIT Working Papers 062, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  12. Derek Yu, 2012. "Youths in the South African labour market since the transition: A study of changes between 1995 and 2011," Working Papers 18/2012, Stellenbosch University, Department of Economics.
  13. Olivier Bargain & Prudence Kwenda, 2010. "Is Informality Bad? - Evidence from Brazil, Mexico and South Africa," Working Papers 201003, School Of Economics, University College Dublin.
  14. Leung, Ron & Stampini, Marco & Vencatachellum, Désiré, 2009. "Does Human Capital Protect Workers against Exogenous Shocks? South Africa in the 2008-2009 Crisis," IZA Discussion Papers 4608, Institute for the Study of Labor (IZA).
  15. Maria S. Floro & Hitomi Komatsu, 2011. "Labor Force Participation, Gender and Work in South Africa: What Can Time Use Data Reveal?," Working Papers 2011-02, American University, Department of Economics.

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