Wage effects of unions and industrial councils in South Africa
In South Africa, unions which played a crucial in the country's transition from apartheid, are coming under fire. Some argue that a high union wage premium, and the industrial council system are important causes of inflexibility in South Africa's labor market. The authors analyze unions'direct effect on workers'wages (including the time-honored question about whether the union wage gap is real, or reflects the fact that workers who are members of unions, differ from those who are not), and ask whether there is evidence that industrial council agreements force affected employers to pay union wages for non-union workers. Theyestimate that among Africans, union members earn about twenty percent more than non-members, while among whites, union workers earn ten percent more than non-union workers. They find that African non-union workers, who are covered by industrial council agreements, receive a premium of six to 10 percent; the premium is positive, but not statistically significant for whites. In addition, the union gap is smaller inside the industrial council system, than outside the system for Africans, implying that the total union premium for union members covered by an industrial council agreement, is similar to the union premium outside the industrial council system. Among Africans, the industrial council, and union wage gaps, are greatest among low-wage workers. To increase employment, policies in South Africa should focus on increasing competition among employers within sectors, rather than increasing competition among workers, by trying to reduce union power.
|Date of creation:||31 Jan 2001|
|Date of revision:|
|Contact details of provider:|| Postal: 1818 H Street, N.W., Washington, DC 20433|
Phone: (202) 477-1234
Web page: http://www.worldbank.org/
More information through EDIRC
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.:
- T. Paul Schultz & Germano Mwabu, 1997.
"Labor Unions and the Distribution of Wages and Employment in South Africa,"
776, Economic Growth Center, Yale University.
- T. Paul Schultz & Germano Mwabu, 1998. "Labor Unions and the Distribution of Wages and Employment in South Africa," ILR Review, Cornell University, ILR School, vol. 51(4), pages 680-703, July.
- Schultz, T.P. & Mwabu, G., 1997. "Labor Unions and the Distribution of Wages and Employment in South Africa," Papers 776, Yale - Economic Growth Center.
- S. Rosen, 1969. "Trade Union Power, Threat Effects and the Extent of Organization," Review of Economic Studies, Oxford University Press, vol. 36(2), pages 185-196.
- Halvorsen, Robert & Palmquist, Raymond, 1980. "The Interpretation of Dummy Variables in Semilogarithmic Equations," American Economic Review, American Economic Association, vol. 70(3), pages 474-75, June.
- Moll, Peter, 1996. "Compulsory Centralization of Collective Bargaining in South Africa," American Economic Review, American Economic Association, vol. 86(2), pages 326-29, May.
- Sullivan, Daniel, 1989.
"Monopsony Power in the Market for Nurses,"
Journal of Law and Economics,
University of Chicago Press, vol. 32(2), pages S135-78, October.
- Griliches, Zvi, 1977. "Estimating the Returns to Schooling: Some Econometric Problems," Econometrica, Econometric Society, vol. 45(1), pages 1-22, January.
- Heckman, James J, 1979.
"Sample Selection Bias as a Specification Error,"
Econometric Society, vol. 47(1), pages 153-61, January.
- Aigner, Dennis J., 1973. "Regression with a binary independent variable subject to errors of observation," Journal of Econometrics, Elsevier, vol. 1(1), pages 49-59, March.
- P. G. Moll, 1993. "Black South African Unions: Relative Wage Effects in International Perspective," ILR Review, Cornell University, ILR School, vol. 46(2), pages 245-261, January.
- Stephan Klasen & Ingrid Woolard, 1999. "Levels, trends and consistency of employment and unemployment figures in South Africa," Development Southern Africa, Taylor & Francis Journals, vol. 16(1), pages 3-35.
- Harry C. Katz, 1993. "The Decentralization of Collective Bargaining: A Literature Review and Comparative Analysis," ILR Review, Cornell University, ILR School, vol. 47(1), pages 3-22, October.
When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:2520. 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: (Roula I. Yazigi)
If references are entirely missing, you can add them using this form.