WP05/2008

The South African labour market: 1995 – 2006

Stellenbosch Working Paper Series No. WP05/2008

Author(s): Derek Yu

JEL Classification: J00

Keywords: South Africa, Household survey, Labour market trends

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Abstract:

Given the importance of the labour market to economic activity in any country, it is important to correctly infer trends from the available labour data. In South Africa, several researchers have compared selected household surveys with each other and then drew conclusions about the ‘trends’ in the labour market for the entire period between surveys. It is argued that such a methodology is imperfect and could give misleading results. A better methodology would entail looking at all the available surveys to ascertain the real trends over time. Therefore, this paper seeks to examine the trends of the labour force (LF), labour force participation rate (LFPR) and employment, as well as the working conditions of the employed, and the personal and household characteristics of the unemployed from 1995 to 2006, using the October Household Survey (OHS) data from 1995 to 1999, and the Labour Force Survey (LFS) data from 2000 to 2006. The paper finds that, with the exception of an unusual slight decrease between 1995 and 1996, the LF and LFPR in both narrow and broad terms experienced a rapid increase during the OHSs, followed by an abrupt increase during the changeover from OHS to LFS. The narrow LF and LFPR have since increased slightly, while the broad LF and LFPR have stabilized. The trends over the LFS period do not suggest any further “feminization of the LF” (Casale 2004; Casale, Muller & Posel 2005), and the abrupt break in this trend between the LFS and OHS periods may suggest that the observed trend over the former period could perhaps have been the result of improved capturing of participation rather than a real shift in LFPR. In addition, the number of employed clearly shows enormous fluctuations, and it is only since LFS2004b that employment growth enjoyed a stable and continuous increase. Therefore, it is possible to obtain contrasting conclusions on whether job creation or jobless growth has taken place in the South African economy, if different reference points are used for comparison. Finally, both the narrow and broad unemployment rates increased continuously from OHS1995 to LFS2003a, before this was replaced by a continuous downward trend since LFS2003b. Such a decline needs to be more rapid before the ASGISA goal of reducing the narrow unemployment rate to below 15% in 2014 could be achieved.