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Labour Demand Trends and the Determinants of Unemployment in South Africa

Labour Demand Trends and the Determinants of Unemployment in South Africa. 2010 CCMA COMMISSIONERS INDABA “Against all Odds” Ritz Hotel 2 – 4 December 2010. Understanding the post-apartheid Labour Market: Key Messages.

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Labour Demand Trends and the Determinants of Unemployment in South Africa

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  1. Labour Demand Trends and the Determinants of Unemployment in South Africa 2010 CCMA COMMISSIONERS INDABA “Against all Odds” Ritz Hotel 2 – 4 December 2010

  2. Understanding the post-apartheid Labour Market: Key Messages • The key drivers of employment trends since 1995 in the South African labour market • Assessing Sectoral and Skills Trends in Employment • Have the institutions of human capital changed labour market outcomes? • Do institutions and regulations matter?

  3. Six Key Labour Market Challenges • Race, Gender and Age continue to influence access to employment and earnings • Employment Generation of the type since 1994 sectorally uneven • The Skills Mismatch between Labour Demand and Supply Continues Unabated • The Institutional and Regulatory Environment Remains Critical • The Spatial Dimension to Employment Creation is Critical • The Quality of Higher Education Remains a Significant Constraint

  4. Challenge 1: Race, Gender and Age continue to dominate labour market outcomes:Pr (Employment) Results 1995,2001, 2009

  5. Challenge 1: Race, Gender and Age continue to dominate labour market outcomes:Earnings Function Estimates 1995, 2001, 2007

  6. Challenge 2: Employment Generation of the type since 1994,sectorally unevenEmployment Growth by Sector, 1994-2009 (‘000s)

  7. Challenge 2: Employment Generation of the type since 1994,sectorally uneven Financial & Business Services Revisited “labour recruitment and provision of staff; activities of employment agencies and recruiting organisations; hiring out of workers (labour broking activities); Investigation and security activities; Outline

  8. Challenge 2: Employment Generation of the type since 1994,sectorally unevenWholesale & Retail Trade Revisited….. Outline

  9. Challenge 3: The Skills Mismatch between Labour Demand and Supply Continues Unabated :Aggregate Employment, by Education Level (% Change)

  10. Challenge 3: The Skills Mismatch between Labour Demand and Supply Continues Unabated Skilled-Unskilled Relative Wages and Employment, 2001-2007

  11. Challenge 4: The Institutional and Regulatory Environment Remains Critical: Union Wage Gap Estimates Across the Earnings Distribution, 2001 and 2007

  12. Challenge 4: The Institutional and Regulatory Environment Remains Critical: Employment Rigidity: Cross Country Percentile Distribution and South Africa, 2010

  13. Challenge 5: The Spatial Dimension to Employment Creation is CriticalMean Transport Expenditure % of Household Expenditure, By Mode of Transport

  14. Challenge 6: The Quality of Higher Education Remains a Significant Constraint : Probability of finding employment: Results from a Sample of HEI Attendees Notes: 1. *Significant at the 1% level. **Significant at the 5% level. ***Significant at the 10% level. 2. Provincial controls were included but are not shown in the table.

  15. Recommendations: Four Microeconomic Policy Options • Three New Options for Growing the Informal Sector • Public Sector Procurement • Short-Term Insurance • FDIs and the Informal Sector Loan Book • Public and Private Employment Services: Reducing Information Asymmetries in the Labour Market • New Measures to Support the Unemployed • Conditional Cash Transfers and the Training Layoff Scheme • A Transport Voucher Scheme to reduce transaction costs of spatial disparities • A wage subsidy cum employment generation for young, African female workers • Labour Regulation at the Margin • Fix the Institutions of the Labour Market (LCs; LACs) • Probation and Pre-Dismissal Procedures of the LRA

  16. Conclusions • Are we Going through a new policy revolution? • Training Layoffs to stay? • Skills Under a New Regime • DoL’s Renewed Focus • Old Macroeconomic Debates are back in the arena (Inflation Targeting, Exchange Rate, Fiscal Policy and Pump-priming…….) • A New (Old-Style) Industrial Policy? • Trying some new ideas? • The insertion of the informal economy into all facets of industrial policy • A re-fashioned UI Scheme? • Political Economy Issues and revisiting the social compact? • Lest we Forget: • Understating the relevance of Financial & Business services in employment and output growth? • Growth Path and Labour market Outcomes are inextricably linked

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