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  • Where to for the South African Labour Market?Some 'Big Issues'
  • Miriam Altman and Imraan Valodia

The labour market landscape has changed dramatically over the first decade of democratic governance in South Africa. Of course, the most obvious change is extremely high and rising rates of open unemployment. This was partly caused by restructuring and capital intensification in traditional resource-based industries, without a concomitant growth in manufacturing or services. Historically, South Africa's formal work places were dominated by large public sector, industrial, mining and agricultural employers. This changed dramatically over the 1990s due to a combination of factors such as globalisation, product market liberalisations, intensified domestic competition arising from easier market entry, and greater alignment of labour market regulation. Services sectors, whether formal or informal, have been an important source of employment growth. People in part-time, temporary, home-based and externalised working situations can no longer be seen as 'atypical', but rather as the norm. There is now a 'diversity' of workplaces, and continuous movement of workers between work states - 'core' formal, 'non-core' formal, informal and unemployed.

In the initial years of the political transition, the labour market was at the centre of economic policy processes. Very soon after the political transition, government appointed a Labour Market Commission to research and review options and to propose a framework for policy. Related to this, the International Labour Organisation (ILO) embarked on a comprehensive review of the South African labour market. Over this period, research interest was focused very much on 'big issues' - active labour market programmes, fair employment practices, affirmative action, workplace democratisation, fair labour legislation, and appropriate labour market institutions. This period was also characterised by far-reaching changes in labour policy with the enactment of the Labour Relations Act, the Basic [End Page 1] Conditions of Employment Act, the Skills Development Act, and the Employment Equity Act.

Partly as a result of the availability of survey data, such as the Labour Force Surveys, research on the South African labour market in the latter parts of the 1990s and the early years of the new millennium tended to focus more on quantitative research, rather than on specific policy questions. Substantial attention was devoted to making sense of the seeming rise in open unemployment, growing labour force participation and the expansion of informal employment; and there has been much debate about the accuracy of the data. We would argue that there has not been sufficient work on broader strategic issues such as the institutional trajectory of the labour market since democracy, and the options for inclusive and sustainable reform. The papers in this special issue of Transformation were prepared for an initiative led by the Employment and Economic Policy Programme of the Human Sciences Research Council (HSRC) and Swedish International Development Agency (Sida) to explore these broader debates.

We begin with a paper by Gus Edgren that situates South Africa in a global context, with comparisons drawn to Brazil, Mexico, Malaysia, Poland, Turkey and Slovakia. South Africa appears to differ in some important respects - particularly in relation to the slow rate of urbanisation despite the lifting of apartheid legislation, and the relatively small informal sector. Relative to these countries, SA experienced very slow per capita GDP growth rates in the 1990s, which partly explains the extremely high rate of open unemployment.

Generally labour market analysis distinguishes the formal sector and the informal sector, with studies rarely considering them together. This project explicitly recognises the fluid boundaries between low-wage formal and informal work. The paper by Valodia et al reviews the character of low-wage formal and informal work, and then considers transitions between the two. This category of worker comprises the majority of the workforce: approximately 65 per cent of South African workers earn less than R 2,500 per month and 50 per cent earn less than R 1,500 per month. They are almost evenly divided between formal and informal employment. The paper by Miriam Altman shows that low waged formal workers have experienced a fall in real earnings since the mid 1990s. Valodia et al's paper shows substantial churning between employment states. While some workers experienced a positive upward move into the...


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