scholarly journals A high unemployment and labour market segmentation: A three-segment macroeconomic model

2019 ◽  
Vol 22 (1) ◽  
Author(s):  
Philippe Burger ◽  
Frederick Fourie
Keyword(s):  
Labour Market ◽  
South African ◽  
Informal Sector ◽  
Entry Barriers ◽  
Barriers To Entry ◽  
The South ◽  
Partial Explanation ◽  
Involuntary Unemployment ◽  
High Unemployment ◽  
Economic Framework

Background: South Africa suffers from an unusually high unemployment rate – officially averaging 25% since 1999Q3. In addition, depending on whether one uses the official or broad definitions of unemployment, since 2008 there are on average between 2 and 3.3 times as many unemployed people as there are people in the informal sector. Hence the question: why do the unemployed not enter the informal sector to create a livelihood?Aim: To fill this gap we propose a macro-economic framework that incorporates both formal (primary) and informal (secondary) sectors, as well as involuntary unemployment resulting from entry barriers to the labour market. We believe such a model provides a more suitable basis for macroeconomic policy analysis.Setting: Standard macroeconomic theories at best provide a partial explanation for the South African unemployment problem, focusing mostly on the formal sector.Methods: The article uses a theoretical analysis.Results: The article presents a macro-economic framework that incorporates both formal (primary) and informal (secondary) sectors, as well as involuntary unemployment resulting from entry barriers to the labour market.Conclusion: If the assumptions on which the model draws hold in the South African reality, then a solution to the unem-ployment problem involve policies addressing product and labour market structures and behaviour in the primary sector, as well as policies addressing the numerous barriers to entry, such as borrowing constraints, that poten-tial entrants into the secondary sector face.

scholarly journals The dual labour market theory and the informal sector in South Africa

2006 ◽  
Vol 6 (1) ◽  
Author(s):  
M. D. Uys ◽  
P. F. Blaauw
Keyword(s):  
South Africa ◽  
Labour Market ◽  
South African ◽  
Working Conditions ◽  
Informal Sector ◽  
Policy Implications ◽  
Informal Employment ◽  
The South ◽  
Market Theory

Purpose of the paper: The purpose of this paper is to revisit the dual labour market theory as far as the informal sector in South Africa is concerned. The hypothesis is that the dual labour market theory must be extended in order to be applicable to the informal sector of the South African economy. It is our view that within some informal occupations a further segmentation exists. Problem investigated: Among South Africa ’s grave socio-economic problems, unemployment is one of the most serious and intractable. An increase in informal and self-employment was experienced during the last decades. Traditional dual labour market theory maintains that jobs can be roughly divided into two groups: those with low wages, bad working conditions, unstable employment and little opportunity for advancement; and those with relatively high wages, good working conditions and opportunities for advancement. The problem that confronts researchers is that even within informal employment, further segmentation is possible. Approach: To determine whether the dualism, that described by the dual labour market theory, is also present within the informal sector itself, available data on a typical informal sector activity, namely car guarding, is analysed. This provides the evidence to achieve the objective of this paper. Findings and implications: The case study of car guards confirms that the dual labour market theory can also apply within the informal sector on the condition that it is expanded to make provision for a further segmentation of the periphery sector. This finding presents several important policy implications. A basket of policies is needed to address the problem of unemployment as effectively as possible. Value of the research: The paper provides further knowledge on informal employment in South Africa. This is an area that requires a lot of attention, given the importance of the informal sector in South Africa and Africa at large. It goes further than the traditional implications stemming from the dual labour market theory. Conclusion: The South African labour market is fragmented, consisting of a well-paid formal sector and the periphery that consists of workers in the informal sector, subsistence agriculture and the unemployed. Within the periphery, there is the possibility that a certain degree of dualism exists. The case study of car guards confirms that the dual labour market theory can be extended to make provision for this dualism, even within the informal sector.

scholarly journals Micro-evidence on day labourers and the thickness of labour markets in South Africa

2014 ◽  
Vol 17 (4) ◽  
pp. 484-499
Author(s):  
Waldo Krugell ◽  
Philip F Blaauw
Keyword(s):  
Labour Market ◽  
Recent Work ◽  
South African ◽  
Informal Sector ◽  
Vocational Training ◽  
Labour Markets ◽  
Policy Implications ◽  
High Unemployment ◽  
Informal Sector Employment

The South African labour market is characterised by sharp segmentation, high unemployment and apparently limited informal sector employment.  Recent work has focussed on the importance of the Micro-evidence on day labourers and the thickness of labour markets in South AfricaThe South African labour market is characterised by sharp segmentation, high unemployment and apparently limited informal sector employment. Recent work has focussed on the importance of the quality of education while others have argued that the rigidity of the labour market constrains employment growth. This paper considers the spatial aspects of the day labour market and argues that the size and proximity of economic activity found in agglomerations ensure a thick labour market that allows for better matching between workers and jobs. The results indicate that the day labourers who were hired by the same employer more often received higher earnings. Once workers have a matric qualification they receive earnings above the average, as do workers who have completed vocational training. Skills, as well as factors associated with a thicker labour market are positively associated with wages. The thicker metropolitan labour market allows workers to become more specialised and receive higher earnings. This has important policy implications and calls for the development of people and places.

scholarly journals ’n Teologies-etiese beoordeling van regstellende aksie

2007 ◽  
Vol 41 (1) ◽  
Author(s):  
E. J. De Beer
Keyword(s):  
Affirmative Action ◽  
Labour Market ◽  
South African ◽  
Ethical Judgment ◽  
The South ◽  
Current Application ◽  
Before And After ◽  
Biblical Principles

A theological ethical judgment of affirmative action In the period directly before and after 1994 much consideration was given to the position of the South African labour market. It was clear that some form of affirmative action had to be instituted. In this article different ways in which affirmative action has been applied since 1994 are studied, as well as the effects thereof. Affirmative action has made it possible for many workers to occupy positions that they otherwise would not have received. Other workers have been negatively affected by affirmative action. How should this be judged? In this article a number of Biblical principles regarding labour are posed. The current application of affirmative action is judged against these principles.

scholarly journals The relative labour productivity contribution of different age-skill categories for a developing economy

2013 ◽  
Vol 11 (1) ◽  
Author(s):  
Gerhardus Van Zyl
Keyword(s):  
Labour Market ◽  
South African ◽  
Labour Productivity ◽  
Estimation Procedure ◽  
Current Debate ◽  
Simultaneous Estimation ◽  
The South ◽  
Managerial Implications ◽  
Labour Legislation ◽  
Relative Productivity

Orientation: The article dealt with the estimation, computation and interpretation of the relative productivity contributions of different age-skill categories. Research purpose: The aim of the article was to estimate and compute, (1) relative productivity contributions and (2) relative productivity contribution–employee remuneration cost levels for different age-skill categories.Motivation for the study: The research was deemed necessary given the current debate on relative productivity levels and possible changes to the retirement age in the South African labour market. No real research in this regard has been published regarding the South African labour market situation.Research design, approach and method: A less restrictive production function was used, allowing for the simultaneous estimation and final computation of relative labour contribution levels of different age-skill categories.Main findings: The lower-skilled segment produced significantly smaller productivity contributions and the relative productivity contribution–employee remuneration cost ratios of the 55 years and older age group were superior in the higher-skilled segment but, at the same time, the lowest in the lower-skilled segment.Practical/managerial implications: It is recommended that human resource practitioners (given the perceived rigidity of labour legislation) implement and maintain structures that promote higher productivity levels for all age-skill categories in the workplace.Contribution/value-add: An estimation procedure, which can be applied to the measurement of the relative productivity contribution of different age-skill categories, has been established.

scholarly journals Declining labour share of income in South Africa: the Kalman filter approach

2015 ◽  
Vol 8 (2) ◽  
pp. 372-391
Author(s):  
Irrshad Kaseeram ◽  
Darma Mahadea
Keyword(s):  
Kalman Filter ◽  
Labour Market ◽  
South African ◽  
Emerging Market ◽  
National Income ◽  
Absorption Capacity ◽  
Relative Distribution ◽  
The South ◽  
Labour Share ◽  
Long Run

Recent research has shown that in both developed and emerging market economies, the labour share of national income has exhibited a declining trend since the 1980s. Research investigating the problem of high unemployment in the South African economy has inferred that this problem arises partly because of past and current socio-political conditions, low rates of economic growth, labour market rigidities, globalisation and institutional arrangements. As the labour absorption capacity is rather low, many people are unable to earn an income from an engagement in the formal labour market. This is likely to have implications for the relative distribution share of labour and capital in the country’s national income. However, no recent published research has investigated this phenomenon in the South African context. Thus, this paper attempts to shed some light on the problem. Using yearly data from 1946 to 2013, the study employs the Kalman filter methodology within the standard Cobb-Douglas production function framework to investigate how labour and capital shares as well as total factor productivity have been behaving in this period. The results indicate that the share of total income going to labour has decreased over the long run, while that of capital has increased. Specifically, the share of capital increased from 3.1% in 1980 to 12% in 2013, while that of labour decreased from 91% to 83%. This reflects a rising income inequality and concentration of wealth, with output and income generation shifting to technological- or capital -intensive production requiring more skilled labour, a trend also observed in certain other countries.

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