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The Cost of Rigidity: The Case of the South African Labor Market

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  • Johannes Fedderke

Abstract

The South African labor market has been characterized by high and persistent levels of unemployment, and a poor capacity to create jobs. This paper examines existing evidence on what rigidities have generated this outcome. Pricing power in output markets, as well as labor supply and demand side rigidities are all found to have contributed, resulting in excessive increases in real wage costs which under conditions of relatively low economic growth, has produced a stagnant labor market. Policy requirements are the pursuit of stonger economic growth and reductions in real labor costs.

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  • Johannes Fedderke, 2012. "The Cost of Rigidity: The Case of the South African Labor Market," Working Papers 290, Economic Research Southern Africa.
  • Handle: RePEc:rza:wpaper:290
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    Cited by:

    1. Dieter von Fintel, 2016. "Wage flexibility in a high unemployment regime: spatial heterogeneity and the size of local labour markets," Working Papers 09/2016, Stellenbosch University, Department of Economics.
    2. Dieter von Fintel, 2017. "Institutional wage-setting, labour demand and labour supply: Causal estimates from a South African pseudo-panel," Development Southern Africa, Taylor & Francis Journals, vol. 34(1), pages 1-16, January.

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