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Labour Market Review, September 2003

Labour Market Review, September 2003

Department of Labour

Labour Market Review September 2003 Pu P u blished for th e C h ie f Dir e c to ra te o f La bour M arke ar ke t Po l ic y Pub l is h e r Department of Labour Chief Directorate of Communication Private Bag X117 Pretoria 0001 South Africa

Co ntrib s Contr ib uto r rs Muzi Maziya Theo Sparreboom Tom Hertz Michael Alibor Jan de Jager Sabata Nakanyane

Editin Edit in g, la you t a nd d e s ig n, a nd d is trib tr ib utio n Media Production Unit Chief Directorate of Communication Department of Labour

Printe r Formeset, Cape Town

ISBN 0-621-33663-7 i

Labour Market Review, September 2003

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Labour Market Review, September 2003

Contents Page

Purpose a nd content of the Labour Market Re view Review

1

Overview South Africa’s labour lab our markets a nd policies

3

Minimum wa ges a nd poverty: Wh a t does the f uture hold?

11

Tom Hertz

Introductory note Protection of vulnerable workers

15

Chronic poverty a nd employment

17

Michael Aliber

Productivity in South Africa

21

Jan de Jager

Provincial snapshots a nd snippets

25

Book review

32

Sta tistical a nnexes

34

I. II. III. IV. V. VI. VII. VIII.

Population and labour force Employment Unemployment Labour relations Health and safety Economic environment Productivity Sources

36 37 42 47 51 52 53 54

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Labour Market Review, September 2003

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Labour Market Review, September 2003

Purpose a nd content of the Labour Market Review This is the first issue of the Labour Market Review, a new publication of South Africa’s Department of Labour1. It is targeted at those with an interest in labour market developments and policies in South Africa, including government departments, employers’ and workers’ organisations, labour market institutions and other stakeholders. The Review is intended to be a platform for the presentation of up-to-date labour market information and research in the area of employment and labour, and a forum for the discussion of policies and activities from various points of view. Each Labour Market Review will contain a number of articles that focus on a particular theme. The theme of this first issue is ‘Reducing poverty through labour market policies’, and the contributions are summarised in the next section. As the Review is also intended to provide information, to a wider audience, about the activities of the Department of Labour, there is an introductory article on the nature and role of sectoral determinations, which fits in with the theme of this issue. Future editions will have introductory articles on other mandate areas of the Department. These areas cover employment and labour market conditions in a broad sense, ranging from basic conditions of employment, employment equity, skills development and employment promotion to unemployment insurance, health and safety issues and labour relations. As a forum for sharing information, the Review will also contain summaries of developments in research on the labour market, highlight debates on labour law or judgments, and reviews of relevant research papers and books. The articles will be followed by statistical annexes containing key indicators on labour market developments and policies. The annexes therefore include indicators that show the current state of labour markets in South Africa, for example the labour absorption rate, as well as indicators directly reflecting policies and activities of the Department of Labour, such as the number of beneficiaries of unemployment insurance. There are eight annexes: Annex Annex Annex Annex Annex Annex Annex Annex

I. II. III. IV. V. VI. VII. VIII.

Population and labour force Employment Unemployment Labour relations Health and safety Economic environment Productivity Sources

A number of national and provincial indicators in the annexes are discussed in the overview of labour market indicators and policies later in this issue of the Review. It should be noted that the present set of indicators is not intended to be comprehensive, and will be expanded in future issues of the Review in conjunction with the selection of themes. The Department of Labour has established Labour Market Information and Statistics and Planning units in all nine provinces (two in Gauteng). These units have contributed information for the annexes as well as the ‘provincial snapshots and The opinions expressed in the Labour Market Review are those of the authors only, and not those of the Department of Labour except where stated. Efforts have been made to ensure that the information contained in this Review is reliable but the Department makes no guarantee of its accuracy or completeness and does not accept any liability for any errors. The information and opinions contained in the Review are also not intended to be used as a basis for commercial decisions and the Department accepts no liability for any decisions made in reliance on them.

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Labour Market Review, September 2003 snippets’, which surveys developments in provincial labour markets and is also presented in this issue.

Reducing poverty through labour market policies The theme of this first issue of the Labour Market Review, ‘Reducing poverty through labour market policies’, reflects the link between labour market policies and poverty reductions that has long been recognised in research and policy analysis. Labour is often the only economic resource of the poor and poor households depend heavily on labour income2. Recent interventions by the Department of Labour such as the promulgation of sectoral determinations for domestic and farm workers, and the extension of the coverage of the Unemployment Insurance Fund to domestic and seasonal workers, have been the subject of much debate. Many have complained, often without any analytical backing, about the likely employment losses that will occur as a result of such interventions. However, few have recognised that the poor can be the net gainers, even if there is some employment lost. The article by Tom Hertz explores the debate and evidence on the impact of minimum wages on poverty. Hertz also outlines the medium-to-longer term studies or analysis that needs to be undertaken to ascertain the exact impact of the sectoral determinations on labour markets and poverty in our country. The article by Michael Aliber discusses the relationship between ‘chronic poverty’ and employment. He explores in some detail how access to the labour market, and where one finds oneself within the labour market, can be an important predictor of the poverty status of a household. His article again illustrates the labour markets and poverty nexus and highlights how policies that address unemployment, skills development, rights at work, and employment equity, can play a critical role in poverty alleviation.

See for example see Lipton and Ravallian (1995), “Poverty and Policy”, in Handbook of Development, Elsevier Science, North Holland.

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Labour Market Review, September 2003

Overview South Africa’s labour markets a nd policies Introduction The publication of this first issue of the Labour Market Review takes place against a background of mixed labour market developments. Since the democratic transition, there have been vast improvements in employment equity, security and labour relations, and establishment surveys suggest that the volume of formal sector employment has recently started increasing. As noted by the Reserve Bank3, the macroeconomic performance of the South African economy is fairly impressive, and sound fiscal policies over a number of years have created opportunities for the introduction of specific growth supportive measures in the Budget for 2003/2004. Furthermore, in recent years productivity has been boosted, and early in 2003 there were signs that inflation was abating. Economic, employment and labour policies that have been put in place since the democratic transition certainly have contributed to these positive developments. However, labour force surveys suggest that socio-economic developments in the past decade or so have resulted in an increase in the number of entrants into the labour market that goes beyond the natural rate of population growth. Formal sector employment growth is not sufficient to absorb new entrants, and the unemployment rate remains very high. Besides, large segments of South African labour markets continue to be characterised by high levels of inequality and vulnerability. Not all those employed in the formal sector are working in acceptable circumstances, and the risks of having to work in sub-standard conditions is certain to rise in the less-protected segments of the labour market. In short, the challenge of decent employment for all is still enormous in South Africa, and this challenge is key in the achievement of a more equitable society that is free of poverty. It is against this background that we review in this paper a number of key indicators of labour market developments and policies4. The intention is to provide a brief analysis, and not a comprehensive account of all indicators. The main message that we would like to convey in this issue of the Review is the need to consider a range of labour market indicators over time to grasp labour market developments and the effects of labour market policies.

The labour force a nd labour force participa tion The labour force, or economically active population, consists of both those who are employed and those who are unemployed. It excludes full-time scholars and students, full-time homemakers, those who are retired, and those who are unable or unwilling to work (the economically inactive population). The size of the labour force is determined by the size of the working age population (those aged between 15 and 65 years) and the labour force participation rate, which is influenced by a host of socio-economic and other factors. Annex I shows the number of persons of working age, labour force participation rates, the number of employed persons and the number of unemployed persons, among other labour market indicators, for a three-year period (2000-2002). This annex is based on the programme of labour force surveys 3

Quarterly Bulletin No. 227, South African Reserve Bank, Pretoria, March 2003.

This review draws on contributions from the Department of Labour and other institutions, but the views expressed are those of the authors only.

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Labour Market Review, September 2003 undertaken by Statistics South Africa (Stats SA) since 2000, which is the main source for analysing the labour market as a whole in South Africa. The surveys, which are undertaken twice yearly, currently consist of interviews with a sample of approximately 30 000 households. Tables in the annex only show the results from the second (September) survey of each year.

Fi g u r e 1 Eco n o mica lly a ct ive po p ul a tio n ctive 1 9 9 4 - 20 0 2 20 000

Economically active population (1 000)

15 000

10 000

5 000

0 1994

1995

1996

1997

1998

1999

Feb 00

Sep 00

Feb 01

Sep 01

Feb 02

Sep 02

9 959

9 713

9 609

9 787

12 553

13 527

16 213

15 794

16 077

15 358

16 130

15 866

Source : Statistics SA, OHS 1994-1999 and LFS 2000-2002 Given the natural growth rate of the population of working age, the labour force is likely to grow in the long run. Looking at relatively short periods, such as the past two or three years, seasonal and other short term influences may dominate the picture. This is reflected in Figure 1, which shows the size of the labour force during 1994-1999 as well as during 2000-2002. The data in the latter period show fluctuations in the labour force during each year, probably due to employment patterns in subsistence agriculture and school-to-work transitions5. The much larger differences between the size of the labour force during the 1990s and the first three years of the present decade are at least in part explained by differences in methodology and survey implementation between the October household surveys and the present programme of labour force surveys. Similarly, the labour force participation rates during the period 2000-2002, ranging between 56 and 62 per cent (if the official definition of unemployment is used, see below), are much higher than those recorded during much of the 1990s (ranging from 43 and 48 per cent)6, and probably reflect both real changes in the labour market and factors relating to survey implementation. One structural characteristic of labour markets that South Africa shares with virtually all countries for which statistics are available is the difference between female and male labour force participation 5 Labour force survey (September 2002), Statistical Release P0210, Statistics South Africa, Pretoria, March 2003. 6

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Unemployment and employment in South Africa, Statistics South Africa, Pretoria, 1998

Labour Market Review, September 2003 rates. This difference amounted to more than 12 percentage points in the most recent labour force survey (51 percent for females, 63 per cent for males). Large gaps can also be found between labour force participation rates of ‘Africans’ and ‘Others’ (54 per cent and 66 per cent, respectively), with a similar difference between females and males in each group. It is important to take the effects of international migration on the size and composition of the labour force into consideration. By all accounts, migration has had and still has important effects on the size of the South African labour market, and these effects are quite likely to have increased since the democratic transition. However, the exact magnitude of the phenomenon is still the subject of much debate and research on migration is continuing.

Employment Between 10.8 and 11.9 million people were counted as employed during the past three years, with the most recent overall level of employment estimated at 11.0 million people (see Figure 2 and Annex II). These numbers include all people who did have some form of paid work during the seven days prior to the survey interview, which clearly does not necessarily mean full-time or regular employment.

Fi g u r e 2 N u m b er of employed em ployed 1 9 9 4 - 20 0 2 14 000

12 000

Employed (1 000)

10 000

8 000

6 000

4 000

2 000

0 1994

1995

1996

1997

1998

1999

Feb 00

Sep 00

Feb 01

Sep 01

Feb 02

Sep 02

7 971

8 069

7 590

7 548

9 390

10 369

11 880

11 712

11 837

10 833

11 393

11 029

Source: Statistics SA, OHS 1994-1999 and LFS 2000-2002 Out of the 11 million employed in September 2002, 64 per cent were employed in the formal sector excluding agriculture, or more than 71 per cent if commercial agriculture is included (the formal sector was defined as consisting of all businesses that are registered in any way). More than 15 per cent worked in the informal sector (defined as those businesses that are not registered in any way), and almost 5 per cent in subsistence agriculture. The remaining 8 per cent worked in domestic service (see Annex II for breakdowns of all employed people). In terms of industries, most of the employed are to be found in the Wholesale and Retail Trade (20 per cent), Community, Social and 5

Labour Market Review, September 2003 Personal Services (19 per cent, which includes the Public Sector) and Manufacturing (15 per cent). The number of people working in the formal sector can also be based on a survey of registered businesses (establishment survey), as opposed to a survey of households (labour force survey). Establishment surveys are undertaken by Stats SA on a quarterly basis. The most recent survey shows that the number of employees amounts to 4.7 million7, which is much lower than the more than 7.0 million people counted in the labour force survey as being employed in the formal sector. The difference is explained by the differences in methodology and the coverage of the establishment surveys which excludes certain industries. The establishment surveys show an increase in employment in all industries between December 2001 and December 2002 of 1.2 per cent. Growth was measured in the Community, Social and Personal Services Industry (2.4 per cent, or 35 thousand employees), Manufacturing (2.3 per cent), Mining (2.2. per cent) and Construction (0.6 per cent). Job losses occurred in Transport, Storage and Communication (-4.3 per cent, or 9 thousands employees less), especially in government institutions, Wholesale and Retail Trade (-0.6 per cent), Financial Institutions (-2.7 per cent) and Utilities (-0.7 per cent).

Skills development a nd employment equity The preceding section provided an overview of the employed labour force. Skills development and employment equity are two areas in which well-established policies are implemented aiming to improve the quantity and quality of employment. In the case of skills development policies through the better equipment of workers for the demands of the labour market and the changing economic environment, and in the case of employment equity through the better alignment of employment opportunities with the composition of the labour force. In both areas data collection and reporting mechanisms have been developed that are used to monitor progress in the achievement of objectives. A number of relevant indicators are listed in Annex II8.

Unemployment Stats SA uses the strict definition of unemployment as its official definition. Accordingly, the unemployed are those people within the economically active population who: (a) (b) (c)

did not work during the seven days prior to the interview want to work and are available to start work within a week of the interview have taken active steps to look for work or to start some form of self-employment in the four weeks prior to the interview.

In the alternative, expanded definition of unemployment criterion (c) is dropped9. The importance of considering both definitions is evident from the difference in the number of unemployed according to each definition. Following the official definition, the number of unemployed people is 4.8 million, while the expanded definition results in 7.9 million unemployed people. Given the definition of the active population (employed and unemployed), the definition of unemployment also affects the size of the Comparative labour statistics, Survey of employment and earnings in selected industries (December 2002), Statistics South Africa, Pretoria, March 2003.

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For a detailed account of objectives, indicators and targets of skills development policies see e.g. National Skills Development Strategy, Implementation Report April 2001 to March 2002, Department of Labour, Pretoria, September 2002. Employment equity policies are detailed in Commission for Employment Equity, Annual Report 2002, Department of Labour, Pretoria, April 2003.

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Both the official (strict) and the expanded definition are in accordance with the relevant resolution of the International Conference of Labour Statisticians which is approved by the International Labour Organisation (ILO).

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Labour Market Review, September 2003 labour force and the labour force participation rate (Annex I shows the main labour market indicators according to both definitions). The strict definition of unemployment results in a relatively low size of the labour force and a relatively low unemployment rate (relative in comparison with the expanded definition). The sensitivity of unemployment rates to the definition of unemployment is one reason why some analysts prefer to focus on employment or labour absorption rates (the number of employed people divided by the population of working age see Annex I). Drawback of this focus is that no information is considered concerning the size of the population unwilling or unable to work, e.g. full-time homemakers and students. In terms of the composition of the unemployed, the most affected groups are people between 25-34 years of age, women and ‘Africans’. The overall unemployment rate for women, for example (official definition) is 34.7 per cent in the most recent labour force survey, compared with 26.8 per cent for men (Annex III). Similarly, the unemployment rate for ‘Africans’ is 36.8 per cent, compared with 14.1 per cent for ‘Others’. In terms of provinces, the most affected provinces are Limpopo, KwaZuluNatal, Eastern Cape and North-West.

Labour centres a nd services for the unemployed High unemployment rates are an indictment on job creation efforts in the country. Many people who lose jobs become clients of the Department of Labour, which provides services that include registration as job seekers, counselling, training and unemployment insurance. The ultimate objective of these services is to assist people in gaining re-entry into the world of work. Labour centres are the entry point for the provision of services, and such centres are active in each province. Annex III lists a number of indicators that are relevant in this context. These include the number of registered job seekers, the number of people trained, job placements and the number of beneficiaries of the Unemployment Insurance Fund. Between 1999 and 2001, the number of registered job seekers was on a strong downward trend, which seems in contradiction with the continuous high level of unemployment in the country. Furthermore, the composition of registered job seekers shows that only a small proportion has attained an advanced educational level (Figure 3), suggesting that labour centres predominantly cater for the less highly skilled. Both observations may relate to popular perceptions among job seekers focusing exclusively on the placement function of labour centres, and ignoring services in other areas such as the provision of information relevant to employment opportunities including self-employment, training and so on.

Fi g u r e 3 Reg i st e red job seek ers b y e d uc a tio nal a ttainme nt seekers 1 200

1 000

All 800 Special school Under standard 6 600 Standard 6-7 Standard 8-9 400

Standard 10 Higher than standard 10

200

0 1999

2000

2001

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Labour Market Review, September 2003 Country-wide, the number of applications to the Unemployment Insurance Fund has been on a downward trend for a number of years, reflecting a series of problems regarding the activities of the Fund (see Figure 4).

Fi g u r e 4 U IF : nu mber of a pplica tio ns ap p r o v e d b y typ e 800

700

600

500 Unemployment Illness

400

Maternity 300

Dependants

200

100

0 1999

2000

2001

New legislation10 addresses these problems, and introduces a number of changes such as11: -

Extended coverage Many workers who were previously excluded are now included in the scope of the legislation, including higher income groups.

-

Graduated benefit schedule Benefits will be based on income replacement ranging from 60 per cent for low-income earners to 38 per cent for middle- and high-income earners.

-

Separation of maternity and unemployment benefits Separation of maternity and unemployment benefits allows workers who go on maternity leave to retain their insurance against unemployment. Previously women were discriminated against as women who received maternity benefits exhausted their unemployment benefits.

-

Strengthened compliance and enforcement measures The new legislation addresses the legacy of high levels of employer default and non-compliance through tougher penalties and fines for those employers who fail to comply with the legal requirements and provisions. Wide-ranging measures aimed at dealing with aspects of non-compliance have been detailed, which are deemed sufficient to bring to an end the scourge of employer and worker fraud, and will enhance the capacity of the Fund to

10 The Unemployment Insurance Act, No. 63 of 2001, and the Unemployment Insurance Contributions Act, No. 4 of 2002, were both promulgated on 28 March 2002 and came into effect on 1 April 2002. 11 For details see Annual Report of the Unemployment Insurance Fund, January 2001-December 2001, Department of Labour, Pretoria, July 2002.

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Labour Market Review, September 2003 identify and prosecute defaulters. -

Creation of a contributors’ database An electronic contributors’ database will contain individual contribution records. The new system will lead to the elimination of cumbersome paper-based operations, and curb the potential for fraudulent claims.

Labour rela tions The entrenched adversarial relationship that characterised labour relations in the past has gradually been replaced by a more cooperative one. The shift has been made possible by the willingness of employers’ and workers’ organisations to negotiate and engage in the process of social dialogue, and has consistently been supported by the elaboration and implementation of labour market policies since 1994. The more cooperative relationship is also facilitated by the contribution and intervention of the Commission for Conciliation, Mediation and Arbitration (CCMA). The number of registered trade unions increased from 248 in the mid-1990s to more than 500 in 2002, with membership increasing from 2.7 million in 1995 to more than 4 million in 2002 (see Annex IV).

Fi g u r e 5 N u m b er of in du st ria l a c tio ns stria 120

100

80

60

40

20

0 1999

2000

2001

2002

The shift towards improved workplace relations and efficient dispute resolution has led to an improved industrial relations climate that is reflected in the reduction of the number of strikes and workdays lost across the economy in recent years (Annex IV and Figure 5). With the exception of the municipal workers strike and the two-day anti-privatisation stay-away, the year 2002 has been relatively quiet in terms of industrial actions. Wage negotiations remained the primary reason for industrial actions in 2002, with 21 out of the total of 47 actions due to wage demands, 11 concerned with working conditions and the remaining 15 due to other reasons (disciplinary matters, grievances etc.). Based on the forms received from employers, just over half of the industrial actions were in compliance with the provisions of the Labour Relations Act12. The majority of the industrial actions were resolved through collective bargaining processes and negotiations, while the CCMA was involved in four cases.

12 In terms of the Labour Relations Act, No. 66 of 1995, employers affected by the industrial actions are obliged to submit information forms to the Department of Labour immediately after an industrial action has taken place.

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Labour Market Review, September 2003 Conclusion This overview highlighted a number of labour market indicators that show the state of the labour markets in South Africa. It should be emphasised that only a selection of indicators has been included in this first issue of the Labour Market Review, and the number of indicators is likely to rise as the Review is establishing itself as a regular exercise. The Review already brings together a range of indicators concerning labour markets and labour market policies, and in this way provides a starting point for relevant policy analysis. We hope that such analyses based on adequate information continue to be undertaken on a regular basis and can be reported in future issues of the Review.

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Labour Market Review, September 2003

Minimum wa ges a nd poverty: Wh a t does the f uture hold? Minimum wages covering South Africa’s estimated one million domestic workers became effective in November 2002; another million or so wholesale and retail trade workers were covered as of February 2003; and most recently, on March 1st of this year, minimum wages were extended to roughly 800 000 farm workers. By any standard these are significant policy initiatives, reflecting a commitment on the part of the ANC-led Government to raising the wages and improving the conditions of employment of the nation’s lowest-paid workers. It is hardly surprising that these initiatives have been controversial, and the outlines of the debate are by now familiar. Proponents argue that hundreds of thousands of poorly paid workers will receive substantial wage increases, and many families will be lifted out of poverty as a result. Critics argue that employers will simply retrench those workers they can no longer afford, and that many of these newly unemployed workers will fall into poverty. I will try to shed some light on this debate by reviewing the empirical literature on the effects of past minimum wage policies in other countries. I will also describe my own attempt at simulating the effects of minimum wages for domestic workers. In the end, my best guess is that the recent sectoral determinations are likely to have a relatively modest effect on the number of people in poverty. This effect could be to increase or reduce poverty somewhat, but the available evidence seems to favour the prediction that poverty will decline. I will also discuss how and when we may be able to know what the effects of the regulations actually have been. This last question is perhaps the most important, and here I hope I can offer some constructive advice. According to one observer of the April 24th meeting between farmers, trade unions, and government officials, it appears that all stakeholders accept that, subject to some negotiated fine-tuning, minimum wages will go forward in agriculture, where they met the stiffest opposition (Business Day, 25 April 2002). Given this reality, it may be time to shift the focus away from speculation about what may happen and towards the question of how we can determine what is happening, and why. This requires that we draw the right conclusions from the data that are, or soon will be, available.

Interna tional evidence a nd a forecast for South Africa’s domestic workers Many supporters of the minimum wage cite research from the United States that finds that the minimum wage sometimes has no effect, and sometimes has a slight positive effect, on employment13. While these studies are important, they should not be oversold to a South African audience. The experiences of fast-food workers in Pennsylvania and New Jersey may not tell us much about prospects for domestic and farm workers in Mpumalanga or the Free State. In particular, I think most analysts of the South African agricultural sector would agree that some number of farm workers will indeed lose their jobs as employers comply with the minimum wage. Concerns about job losses are heightened by the fact that the scheduled minimum wages for farm and domestic workers (R650 and R800 per month for full time work, depending on location) would appear to fall at or above the corresponding median wages, implying that more than half of all farm and domestic workers are 13 See David Card and Alan B. Krueger’s Myth and Measurement: The New Economics of the Minimum Wage, Princeton: Princeton University Press, 1995.

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Labour Market Review, September 2003 potentially affected14. Supposing there is a significant reduction in employment, does this mean that poverty will rise? Not necessarily: poverty can rise or fall depending on who gets a raise (was their household above or below the poverty line to begin with?) and who is retrenched (will their household fall into poverty or not?). The results will also depend on which definition of poverty we use. Simply knowing how many jobs are lost is not enough: we need to know where the winners and losers fall in the income distribution, relative to the chosen poverty threshold. This means that the most relevant studies are those that look not at the relation between minimum wages and total employment, but rather at the link between minimum wages and poverty itself. Two recent and careful attempts to answer this question for the U.S. have yielded contradictory results. In one, the number of households moving into poverty due to an increase in the minimum wage was slightly higher than the number escaping poverty15. In the other, the reverse was true16. But in neither study was the change in poverty large enough to be judged statistically significant. This is a point that deserves emphasis: the combination of rising incomes for some and falling incomes for others resulted in only a small net change in the number of people in poverty. Results from developing countries are also mixed, but the evidence would appear to tilt slightly in favour of the proposition that higher minimum wages reduce poverty, or at least do not exacerbate it. One study of 12 Latin American countries observed between 1970 and 1994 finds that higher urban minimum wages were weakly associated with a reduction in urban poverty17. It is estimated that a 1% increase in the minimum wage reduced poverty by 0.15%, but this figure was not statistically significant. A second study based on a cross section of 18 countries, again mostly in Latin America, finds that a 1% increase in the national minimum wage is associated with a 0.46% drop in poverty18. This result, however, is sensitive to how the poverty line is defined, and was not significant for all definitions. A third study looks at 22 developing countries from Africa, Asia and Latin America, observed over some 40 time intervals between 1970 and 199319. It finds uniformly significant beneficial effects, with a 1% rise in the minimum wage generating a drop of between 0.61% and 1.29% in the poverty count, depending on which other factors are included in the analysis. While this evidence is encouraging, it is not based on South African data. Furthermore, these results are derived from analyses of changes over time in the real value of a national minimum wage, as opposed to extensions of minimum wages into previously uncovered sectors. To address these shortcomings, I have attempted to simulate the effects of the introduction of minimum wages in 14

These findings are based on my analysis of the September 2001 Labour Force Survey micro data.

15 David Neumark and William Wascher, “Do Minimum Wages Fight Poverty?” Economic Inquiry, 40 (3), pp. 315-33, July 2002. 16 John T. Addison and McKinley L. Blackburn, “Minimum Wages and Poverty.” Industrial & Labor Relations Review, 52 (3), pp. 393-409, April 1999.

Alain de Janvry and Elisabeth Sadoulet, “Growth, Inequality, and Poverty in Latin America: A Causal Analysis, 1970-1994.” Working Paper No. 784, Department of Agricultural and Resource Economics, University of California at Berkeley, February, 1996.

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18 Catherine Saget, “Poverty Reduction and Decent Work in Developing Countries: Do Minimum Wages Help?” International Labour Review, 149(3) pp. 237-269, 2001. 19 Nora C. Lustig and Darryl McLeod, “Minimum Wages and Poverty in Developing Countries: Some Empirical Evidence.” In Labor Markets in Latin America: Combining Social Protection with Market Flexibility, Sebastian Edwards and Nora C. Lustig, eds., Washington: Brookings Institution Press, 1997. 20 Tom Hertz, “Forecasting the Effects of Pending Minimum Wage Legislation on Poverty in South Africa.” Paper presented at the DPRU/FES Second Annual Conference on Labour Markets and Poverty In South Africa, Johannesburg, October, 2002.

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Labour Market Review, September 2003 domestic service, using the 1993 PSLSD household survey dataset20. What I did was to raise the wages of domestic workers to the minimum under various assumptions about the number of people who would become unemployed21. I then recalculated the household incomes of all affected workers, holding all other sources of income constant, and looked at what happened to poverty and ultrapoverty. What I found is that both poverty and ultrapoverty among domestic workers can fall even if job losses are considerable. In particular, both measures improve so long as the percentage decrease in employment is smaller than the percentage increase in average wages paid, meaning that the wage elasticity of employment is less than one. As far as I know, this elasticity has not been estimated for the domestic service sector. However, in order to argue that the elasticity is greater than one we would need to believe that South Africans will in future spend less, in total, on domestic workers than they spent before the wage increase, which seems unlikely.

Wh a t ca n we know a nd when ca n we know it? Now that the domestic service regulations have been in effect for more than six months, what do we know about their effects on employment? The answer is: not much. The most recent wave of the Labour Force Survey (February/March 2003) may shed some light on the matter, but it is not due to be released until October. In the meanwhile, a LexisNexis search of the nation’s newspapers revealed no stories that provided estimates of the number of jobs lost22. Some evidence, however, can be found in the files of the CCMA, which has seen a rise in the number of cases brought by domestic workers since the regulations went into effect. Most of these cases relate to assertions of unfair dismissal. Between October of 2002 and April of 2003 some 1 186 cases were registered, compared to 767 for the same period in the previous year, an increase of 55%. (I count from October, the month before the regulations were implemented, because this is when the number of cases first rises.) It has been suggested that this increase reflects an increased awareness on the part of domestic workers of their legal rights, and an increased willingness to pursue these rights through formal channels23. I suspect, however, that it also reflects employers reacting to (or in anticipation of) the change in wages, or other provisions of the regulations, by laying off domestic workers. A closer analysis of the case reports might shed some light on the matter, but it would seem unlikely to yield a valid measure of the nationwide employment response. As for farming, let us suppose for the sake of argument that the vast majority of farmers comply with the sectoral determination, and over the next few years we see a significant increase in minimum and average farm wages coupled with a decline in agricultural employment: what will we have learnt? Before drawing any conclusions we must recognise that farm employment has been on a gradual downward trend since the 1980’s, as agricultural product markets have been deregulated, subsidies slashed, and import tariffs all but eliminated. The last agricultural census, in 1996, estimated paid farm employment at 930 000 compared to 1,3 million in 1985, a decrease of 30% in 11 years. Over the past two years commercial agricultural employment as measured by the successive February rounds of the Labour Force Survey (which is not strictly comparable to the agricultural census) appears to have stabilised at just over 700 000 people. But it is still true that many factors besides minimum wages determine employment levels in farming, and will continue to do so. Any estimate of the effects of minimum wages must take account of these other factors, not the least of 21 This work was completed before the final wage levels were announced, and so is based on lower minimum wages than are now in effect. Thus I may have underestimated both the income gains and the income losses due to the regulations. 22 Household employers seem as worried about complying with the UIF registration requirement as they are about paying the minimum wages. Among other problems, those who employ undocumented foreign workers are reluctant to register them for UIF, lest they be deported (Business Day, 17 March 2003). 23

Business Day, 16 April 2003.

13

Labour Market Review, September 2003 which, of course, is the weather. We cannot blame a dry spell on the Minister of Labour, but neither can we give him credit for the rain. A careful analysis of future Labour Force Survey data should be able to determine whether the introduction of minimum wages has had a large effect on the level of poverty and ultrapoverty among farm and domestic workers, although it may be unable to detect these effects if they are small. The first step in such an analysis is to attempt to measure the degree of compliance, by estimating the change in the proportion of workers who report being paid less than the minimum. More detailed case studies may be useful in supplementing our understanding, as would be an analysis of the applications for exemptions that employers will file. Taken together these sources of information could go a long way towards answering the question of whether minimum wages are good, bad, or immaterial for the poor in South Africa. --------------------------------------------------------------------------------------------------------------------------------------Tom Hertz is an applied labour economist on faculty at the American University in Washington DC. He is currently drawing up plans to analyse the future rounds of the Labour Force Survey, to see if effects of the new minimum wage regulations can be detected. His past work includes a dissertation on the question of the economic rewards to education in South Africa. He also served on the secretariat of the Presidential Labour Market Commission during 1995 and 1996.

14

Labour Market Review, September 2003

Introductory note Protection of vulnerable workers The State carries the responsibility of protecting vulnerable workers to ensure that they have the same basic rights as other workers and are afforded the protection of our labour laws as provided for in the Constitution of the country. The Basic Conditions of Employment Act, 1998 (BCEA) is the principal instrument through which such protections are extended. The BCEA lays down a floor of rights for all workers and in addition makes provision for sectoral determinations which set wages for vulnerable and unorganised workers. Workers in certain sectors are deemed vulnerable for various reasons including previous exclusion from labour laws, high levels of exploitation within the sector especially with regard to the wages being paid and the absence of trade unions or other forms or structures for collective bargaining. One of the challenges faced by the Department of Labour in protecting vulnerable workers, is the need to ensure that there is an appropriate balance between security and flexibility in the implementation of sectoral determinations. This balancing act is demonstrated in the approach adopted by the Department which is one that allows the flexibility to modify the existing legislative framework, in this case the BCEA, to accommodate amongst other things: ● ● ● ● ●

poverty alleviation and the cost of living the ability of the employer to carry out business successfully the needs of small scale enterprises labour intensive industries employment creation and the effect on the unemployed generally.

However all these have to be weighed against the interests of the workers whose well- being is of the outmost importance to the Department. To further demonstrate this commitment, the Department has reviewed the BCEA and amended certain provisions in light of its impact on worker welfare and economic efficiency. In making sectoral determinations an integrated and developmental approach is followed which requires the need to set a floor of rights first, in terms of the BCEA which will pave the way for: ● ● ●

skills development social security improved conditions of employment.

By using this approach, the Department is laying the framework for other types of processes that will benefit workers. For instance, social security measures for workers like retirement funds, now become easier to implement once the BCEA has created the necessary framework. The social security net can also be coupled with skills development initiatives and improved occupational health and safety as workers get to know their rights in the workplace, ultimately leading to improved conditions of employment for workers. This approach has proved to be very effective and can be illustrated by the private security and the domestic worker sectors. After sectoral determinations were promulgated for these sectors, it became easy for the Department to set up a provident fund for the private security sector and registration of domestic workers for Unemployment Insurance Fund benefits. The following are some of the sectors which are deemed to be vulnerable and for which sectoral determinations have been put into place: 15

Labour Market Review, September 2003 ● ● ● ● ● ● ● ●

Contract Cleaning Civil Engineering Private Security Clothing and knitting Learnerships Domestic Worker Agricultural Sector Wholesale and Retail.

--------------------------------------------------------------------------------------------------------------------------------------This introductory note has been compliled by the Directorate of Employment Standards in the Labour Relations Programme of the Department of Labour.

16

Labour Market Review, September 2003

Chronic poverty a nd employment Wh a t is chronic poverty? A household or individual is understood to be in chronic poverty when the condition of poverty endures over a period of time. Different researchers propose alternative time periods as characteristic of chronic poverty (e.g. six months, 10 years), usually taken to mean that the household or individual remains beneath the poverty line for all or virtually all of this period. Alternatively, and perhaps more meaningfully, chronic poverty can be understood as a household's or individual's inability, or lack of opportunity, to better its circumstances over time or to sustain itself through difficult periods. As such, chronic poverty can be a function of the individual's characteristics (e.g. elderly, disabled), or of the environment (e.g. sustained periods of high unemployment, landlessness), or of both. The extent of chronic poverty in South Africa is not known with certainty. As one example, however, of 1 200 households in KwaZulu-Natal that were surveyed in both 1993 and 1998, approximately 22% of all households were poor in both periods, and thus could be construed as 'chronically poor', and that these in turn represented between one third and one half of all poor households24. Whether this is representative of the country is difficult to say. What is probable, however, is that much of poverty in South Africa is indeed chronic.

A snapshot of employment a nd unemployment Unemployment is high in South Africa. Between 1994 and 1999, the aggregate unemployment rate rose from 20% to 26%, according to the "narrow definition" used by Stats SA, whereby a person is unemployed if he or she has actively sought work in the past four weeks. According to the "broad definition" of unemployment, whereby one wishes to be employed but has not necessarily sought work in recent weeks, the change between 1994 and 1999 was from 31% to 39%. As Kingdon and Knight25 point out, the gap between the narrow and broad definition figures suggests that a large fraction of the work force is 'discouraged', that is, have ceased actively searching for employment out of frustration, or for lack of resources, or both. Table 1 shows that the incidence of unemployment is considerably greater for Africans and Coloureds than for Whites. It also disaggregates employment by 'sector', by which we mean here informal and formal, and employment versus self-employment. Overall, Africans and Coloureds are more likely to be employed or self-employed in the informal sector, and in absolute terms Whites comprise a relatively tiny share of activity in the informal sector.

24 Roberts, B. J. (2001). "Chronic and Transitory Poverty in Post-Apartheid South Africa: Evidence from KwaZulu-Natal", Journal of Poverty, 5(4). 25 G. Kingdon and J. Knight, 2000, "Unemployment in South Africa: The Nature of the Beast", TIPS Conference "2000 Annual Forum".

17

Labour Market Review, September 2003 Ta b bll e 1 In c i d en ce of em ployme nt a nd une mp l o yme nt b y ra c e employm ent a nd ector nd s sect or 1999 African and Coloured millions Unemployed Employee, formal sector Employee, informal sector* Self-employed, formal sector Self-employed, informal sector Total

White

percent

millions

percent

6.7

45.5

0.2

8.5

5.4

36.9

1.5

69.4

1.4

9.6

0.1

2.4

0.1

1.0

0.3

14.3

1.0

7.0

0.1

5.4

14.7

100.0

2.2

100.0

Source: calculated from OHS 1999. * Note: includes domestic workers. Not surprisingly, the incidence of unemployment is strongly differentiated according to race, gender, and place of residence. Unemployment is more severe among women than among men, and among Africans is considerably more severe in rural areas than in urban areas. The fact that unemployment among Africans is higher in rural than in urban areas, is something of an international anomaly, and probably in large measure is due to the insufficiency of Africans' access to agricultural land.

Link between employment sta tus a nd chronic poverty Given the relative unimportance of self-employment among Africans and Coloureds, it stands to reason that changes in one's status in the formal labour market is central to one's economic situation. However, the problem in South Africa is not just that access to formal sector jobs is limited, but that among those who fail to access such jobs do so for protracted periods of time: ●



Seventy percent of those who are presently unemployed have never had a job. The figure for women is 73%; for Africans 73%; for rural dwellers 76%; and for rural African women 79%. Around 69% of those who are presently unemployed have been unemployed for more than one year, while 41% have been unemployed for more than three years; among the African unemployed, the figures are 72% and 44%, respectively.

The situation is complicated by the changing nature of formal sector employment in South Africa. The overall pattern of formal sector employment in South Africa over the past several years is that fewer people have employment but those who do have enjoyed real increases in remuneration. However, there is also a broadening grey area involving more employment through the secondary labour market, whereby tasks that had previously been performed by permanent, regular workers are increasingly being performed by temporary, casual, and part-time workers, or what are sometimes euphemistically called "independent contractors". The decline and 'flexibilisation' of employment in the commercial agricultural sector are especially damaging for rural livelihoods, because commercial agriculture represented almost one third of formal sector employment in rural areas in 1998, and yet the total amount of regular employment on farms has declined by about 20% over the past decade. 18

Labour Market Review, September 2003 The link between employment type and unemployment on the one hand, and personal or household welfare on the other, can be demonstrated. One way of doing this is by using a proxy for household welfare from OHS 1999, namely whether or not a household reports not having enough money to purchase sufficient food for its children at some point during the year26. The virtue of this measure as a proxy is that it focuses on a feature of welfare that is universally considered important – the ability to access sufficient food. The downside is that this particular measure applies only to those households with children aged seven or younger. Figure 6 below shows the frequency with which respondent households indicated that they had not had enough money for food, according to the employment status of the household head or acting household head.

Fi g u r e 6 Fr eq u e n cy wit h which h o us e h o l d s e x p e rie with r ie nc e problem s f eedin g child re n, b y e mp l o y me nt s ta tus o f ms h o usehold hea d 40 36% 35 32% 30

25

24%

20 16% 15 13% 11% 10

5

4% 3% 2% 0%

0 Unemployed

Employed formal

Employed informal

Africans and Coloureds

Self-employed formal

Self-employed informal

Whites and Indians

One can draw a number of conclusions from Figure 6: ●







For Africans and Coloureds, the fact that the household head or acting household head is unemployed significantly raises the chances that the household will face severe poverty. By extension, protracted unemployment implies chronic poverty. For Africans and Coloureds, it is significantly better to be in the formal sector than the informal sector. For Africans and Coloureds, being employed in the informal sector is almost as bad as being unemployed, and is significantly worse than being self-employed in the informal sector. Again, this suggest that exclusion from formal sector employment is a strong predictor of protracted, i.e. chronic, poverty. The discrepancy between Africans and Coloureds on the one hand, and Whites and Asians on the other, is great, with households in the latter category much less likely to experience severe poverty regardless of the household head's employment status.

One problem with the picture presented above is that it does not take into account the fact that household members other than the head or acting head may also perform an important role in supporting the household. If we look at the employment status profile of households (excluding 26 The exact question from OHS 1999 reads, "In the past year, was there ever a time when children under seven years of age went hungry because there was not enough money to buy food?"

19

Labour Market Review, September 2003 households in OHS 1999 that comprise only one person), we find that 42% of all African and Coloured households have no member with formal sector employment or self-employment; only 19% of those without a member in formal sector employment or self-employment have a member engaged in some form of informal sector employment or self-employment; and 34% have no member with any form of employment or self-employment at all27. One would be mistaken in thinking that households lacking employed members tend to be small relative to those having employed members – in fact, a disproportionate number of larger households are exactly those households in which there is no member engaged in the formal sector or in which all the adults are unemployed. Presumably these are households that rely on a combination of social grants and remittances, e.g. 'granny households'. The implication of all this is that unemployment and under-employment tend to run in households, and one would expect these to be the most vulnerable households of all.

Conclusion Unemployment and under-employment are among the two most significant causes of chronic poverty in South Africa. From a policy perspective, however, the implications are not obvious. While social welfare grants play a vital role in preventing chronically poor households from falling into absolute destitution, they rarely serve as a means by which households can escape the poverty trap. Although increasing employment would obviously do much to reduce the incidence of chronic poverty, doing so is certainly no simple matter. Perhaps the most specific suggestion to emerge from the discussion above is that, from a welfare perspective, informal sector jobs are a poor substitute for formal sector ones, thus to the extent promoting the informal sector is one route to dealing with the unemployment crisis, measures must be sought to make it not only larger but more remunerative. --------------------------------------------------------------------------------------------------------------------------------------Michael Aliber is a researcher with the Human Sciences Research Council. He has recently published, "Chronic Poverty in South Africa: Incidence, Causes And Policies" in World Development, March 2003, based on research funded by DfID and the Chronic Poverty Research Centre.

27

20

The balance of about 6% would appear to be households where no adult member is in the workforce.

Labour Market Review, September 2003

Productivity in South Africa Productivity is of interest to individuals, organisations in the public and private sectors, foreign investors as well as social groups such as business and labour. This wide-ranging interest in productivity derives largely from the impact of productivity on global competitiveness. It is an established fact that productivity engenders improvement in both the quality and quantity of economic output. One of the implications of improved productivity is its impact on the cost of producing a unit of output, and therefore an important determining factor of competitiveness. However, the South African economic environment presents complex challenges – mainly in terms of our economy’s low labour absorptive capacity. This is clearly demonstrated by a tendency in recent years to improve productivity by reducing input via job losses. Productivity Statistics, compiled by the National Productivity Institute (NPI) (see Annex VII), shows that multifactor productivity in the private sector (excluding agriculture) improved by 2,4% in 2002, which is somewhat below the 3,6% and 4,3% recorded in 2000 and 2001 respectively. In 2002 labour productivity increased by 3,6%, and fixed capital productivity by 2,2%. It is good news, however, that the latest productivity increases were achieved with only minimal job losses - in contrast to the previous two years when sizeable employment declines accompanied those increases.

Ta b bll e 2 Sect o ral a l em ploymen t numb e r s a nd ra te s o f c h a ng e in m u l t i fa ctor ct or produ ctivity 20 0 1 t o 20 0 2 2 00 Multifactor productivty

Employment number Sectors 2002 Mining

2001

%

%

411 642

406 630

1.2

-4.2

1 270 647

1 262 623

0.6

2.5

38 677

39 203

-1.3

3.7

Construction

214 333

218 638

-2.0

0.4

Wholesale and retail trade, catering and accommodation

884 494

883 773

0.1

1.1

Transport, storage and communication

200 874

209 159

-4.0

6.1

Finance, insurance, real estate and business services

187 307

193 504

-3.2

3.7

3 207 973

3 213 529

-0.2

2.4

Manufacturing Electricity, gas and water

Private economy, excluding agriculture

Job losses continue to remain a worrying aspect for the NPI. Table 2 shows that the largest job losses in 2002 occurred in the Transport (-4,0%), Finance (-3,2%) and Construction Sectors (-2,0%). 21

Labour Market Review, September 2003 Jobs were created in the Mining Sector (1,2%), the Manufacturing Sector (0,6%) and the Trade Sector (0,1%). The Manufacturing and Trade Sectors managed to improve their productivity and created jobs as well. This is the ideal way to increase productivity! According to the Labour Force Survey (March and September 2002), the Trade Sector employed the most workers (2 241 000) followed by the Community Services Sector, which includes government, with an average labour contingent of 2 033 000 during 2002 (see Table 3 and Figure 7).

Ta b bll e 3 G r o s s v a lu e a dded by kind o f e c o no mic a c tiv ity , in 1 9 9 5 p rices r ices a n d em ployme nt 2 00 2 Sector Agriculture

Employment number

GDP Rm

Employment % of total

GDP % of total

1 443

26 022

14.4

4.3

491

32 982

4.9

5.4

1 623

122 352

16.1

20.2

83

21 474

0.8

3.5

557

18 428

5.5

3.0

2 241

82 071

22.3

13.5

553

70 590

5.5

11.7

Finance, insurance, real estate and business services

1 027

118 425

10.2

19.5

Community, household and other

2 033

113 490

20.2

18.7

10 050

605 834

100.0

100.0

Mining Manufacturing Electricity, gas and water Construction Wholesale and retail trade, catering and accommodation Transport, storage and communication

Total

Figure 7 show the employment distribution in the economy for 2002, using the Labour force Survey results.

22

Labour Market Review, September 2003 Fi g u r e 7 Em p l o ym y m en t by k in d of e c o no mic a c tiv ity 20 0 2 Agriculture 14.4%

Community 20.2% Mining 4.9%

Finance 10.2%

Manufacturing 16.1%

Transport 5.5%

Electricity 0.8% Construction 5.5%

Trade 22.3%

The government was one of the biggest contributors to output (products and services) in the economy at 13,5%, and 18,7% when other social and personal services are included (Table 3 and Figure 8). The Manufacturing Sector (20,2%) contributed the biggest share to GDP, followed by the Finance Sector with 19,5%.

Fi g u r e 8 G r o s s v a lu e a dded by kind o f e c o no mic a c tiv ity 2 00 2 Agriculture 4.3%

Mining 5.4%

Government 18.7%

Manufacturing 20.2%

Finance 19.5%

Electricity 3.5% Construction 3.0%

Transport 11.7%

Trade 13.5%

23

Labour Market Review, September 2003 Labour productivity in the private economy (excluding agriculture) increased by 5,5% per annum between 1996 and 2002. Capital productivity improved by 1,7% during the same period, and multifactor productivity by an average annual rate of 3,1%. Six of the main sectors in the economy – Mining, Manufacturing, Electricity, Construction, Transport and Finance – achieved multifactor productivity gains during this period. The only exception was Commerce (Wholesale and Retail Trade, Catering and Accommodation), which showed a decline of 0,9% per annum. Increases varied between 0,2% per annum in the Mining Sector and 7,3% per annum in the Transport Sector. Only the Commercial Sector created more jobs over the period 1996 to 2002, but recorded a -0,9% per annum decline in multifactor productivity. Unit labour cost trends give an indication of the competitiveness of the main sectors of the South African economy (Table 4). Only two sectors, namely Mining (8,1%) and Finance (6,8%), had increases in unit labour costs in excess of the average inflation rate for the period (6,5%). Competitiveness in the other sectors therefore improved in addition to the competitiveness gains from other sources such as a depreciating currency – although the appreciation of late would impact negatively on international competitiveness. South African organisations are making progress in developing their productive capacity. This progress is evidenced by increased competitiveness in the global arena. According to the survey results of the World Competitiveness Yearbook 2002, South Africa gained ground in the following areas (the figures in brackets indicate South Africa’s score out of 49, and lower scores indicate stronger competitiveness): working hours (15), unit labour cost increases in manufacturing (16) and remuneration in the services professions (14). Factors that require attention include the availability of skilled labour (47), financial skills (46), senior managers (41), and managers with international experience (41). Labour relations (44), worker motivation (45) and the brain drain (49) require attention. The NPI is making every effort to sustain socio-economic growth in South Africa. The Institute is dedicated to developing and enhancing productive capacity and advocates the acquisition of knowledge, skills, values, resources and technology for this purpose. NPI interventions include promoting productive capacity among women, in SMMEs, rural communities, youth and education. The NPI attends to the needs of emerging organisations, big and small companies, national, provincial and local public sector organisations, community-based projects, non-governmental organisations and educational institutions. The NPI has been involved in implementing the Social Plan programme - an outcome of the Presidential Jobs Summit of 1998 - to help prevent or minimise job losses. The Institute also played an important role in the Workplace Challenge programme aimed at making South African industry more competitive. The NPI is involved in the proposed Productivity Accord that is currently investigated by NEDLAC to promote sharing of the proceeds of productivity improvements in the workplace between the social partners. --------------------------------------------------------------------------------------------------------------------------------------Jan de Jager is the Chief Economist of the National Productivity Institute (NPI). The views expressed in this article are his own and not necessarily those of the NPI or the Department of Labour.

24

Labour Market Review, September 2003

Provincial snapshots a nd snippets As a regular feature, the Review will contain news and analysis on the provinces. The provincial LMIS&P units will provide the information. For this edition we focused on the Free State, KwaZulu-Natal, and the Northern Cape.

Free Sta te G eo g ra phica l descriptio descript io n The Free State Province covers an area of 129 480 km2 (10,62% of the total area (1 219 090 km2). The province consists of 5 District Councils (DC) namely: a. b. c. d.

Xhariep: This includes Zastron and Koffiefontein Labour Centres Motheo: This consists of Bloemfontein and Thaba Nchu Labour Centres Lejweleputswa: This includes Welkom Labour Centre Thabo Mofutsanyane: This includes Bethlehem, Harrismith, Phuthaditjhaba and Ficksburg Labour Centres e. Northern Free State: This includes Kroonstad and Sasolburg Labour Centres

D em o g ra phic a n d socio -e c o no mic p r o fil e socio-e ro According to census 1996, the total population in the Free State is about 2,6 million, which was 6,5% of the total population in South Africa (Statistics SA, Census’96). The province is currently classified as the second densely populated area in the country. In October 1999, about 70,5% of residents lived in urban areas while the remainder resided in non-urban areas. Among children aged 5 -17 years, 68,1% were living in urban areas. The vast majority of children in this age category were African.

Labour m a rket ma rk et st a t istic s in th e p r o v inc e s In view of the statistics released by Statistics South Africa, the following trends emerged in the Free State labour market: ●





The total number of people who are not economically active, has decreased gradually over time, from 729 000 in 1997 to 535 000 in 2002. The number of those who are economically active, i.e. both the employed and the unemployed, has, however, increased from 1 014 000 in 1997 to 1 298 000 in 2002. The number of employed (in both formal and informal sectors) has also increased gradually over time by 9,9% between October 1997 and February 2002. The number of unemployed (expanded definition) has also increased over time from 323 000 in October 1997 to 531 000 in February 2002. This reflects about 40% of people loosing or not finding employment. It can also mean, on the one hand, an increasing numbers of those who were previously students and became available for work. Migration can also explain the increase in number of unemployed people in the province.

Figure 9 illustrates the main indicators of the labour market on census 1996, October 1999 (October Household Survey, (OHS)) and February 2002 (Labour Force Survey, (LFS)). It indicates that: ●

The labour force participation rate increased from Census 1996 to October 1999 but remains almost the same in October 1999 and February 2002. The reason may be because of the 25

Labour Market Review, September 2003 ●



increasing number of those who are classified as not economically active. In general, the labour absorption rate remains relatively the same in both Census 1996 and February 2002. This indicates that few people were actually employed in both the formal and the informal sector in the province. According to census 1996 results, an estimated 30% of women and men living in the Free State were unemployed. In February 2002, however, the unemployment rate increased to 40% for both women and men in the province.

Fi g u r e 9 L a b o u r force pa rt icipa tio n ra te 28 , l ab o ur ab s o r p tio n a n d u nemploym en t ra te s a mo ng s t th o s e a g e d 1 5 -6 5 y ea r s ( Expa n ded definitio n) fo r C e ns us 1 9 9 6 , O ct o b er 1999 a n d February ebruar y 2 002 80

70.8

70.5 70

61.3

% in each category

60

50 42.9

41.8

41.2

40.8

40 34.0 30.0

30

20

10

0 Census 96 Labour participation rate

OHS 1999 Labour absorption rate

LFS / Feb 2002 Unemployment rate

Source: Statistics South Africa, various reports, own calculation

Br e a k down of occu pa t io n al o ng g e nd e r l ine s tio Among those who were employed, the distribution of work by occupation was more evenly spread among employed men than among employed women. A large percentage of women is found in elementary or domestic, clerical and sales occupations. For example, 27% of women compared with 0,1% of men were domestic workers. A large number of women in this sector may indicate a low level of education and skill among women. In the highest occupation group – managers - the proportion of employed men (6,2%) was almost double that of women (2,9%). (Statistics South Africa, Labour Force Survey, September 2001, own calculation)

28 The labour force participation rate is the sum of those who are employed and those who are unemployed, expressed as a percentage of the total working age population. The labour absorption rate is the proportion of the total working-age that is employed.

26

Labour Market Review, September 2003 Sect o ral a l a n a lysis of emp l o yme nt Irrespective of population group, employed women tend to be concentrated in relatively fewer economic sectors than men. ● Figure 10 shows that approximately one in every four (25%) employed women was in the community and Social Services Sector, and almost one in every five in Trade (21%). ● The Agriculture, Forestry and Fishing Sector in the Free State provided a large number of jobs to men (18,9%) compared to women (6,4%). Mining accounted for a substantial proportion of jobs in the province among men (21,6%). ● Construction and Mining were by far the most male-dominated sectors. Only 0,3% and 0,6% of workers in these sectors were women.

F i g u r e 10 Eco n o mic sector sect or in whic h e mp l o ye d p e o p l e ( 1 5 - 6 5 yea rs) work 30

25.3 25 Agriculture 21.6 20

21.5 Mining

18.9 Manufacturing 16.7 Electricity

15

14.0

Construction Trade

11.2 10

Transport

8.7

5.1

5

Finance

6.4

5.9

5.8 Community

4.7

1.3

0.8

0.3

0.3

0.6

0 Male

Female

Source: Statistics SA, LFS Sept. 2001 (own calculation, excluding unspecified)

O ver v i e w of sta o m p ro es st atistics t istics fr ro r o v inc ial l ab o ur c e ntr ntres Ta bl b le 4 To t a l nu mber n um ber of work se s e e ke r s a nd U I ap p l ic a tio ns ( Q ua r ters t ers 1 to 4 from Ja nuary to De c e mb e r in 2 002 Periods

Number of work seekers Registered

Placed

Unemployment Insurance applications

% Placement

Received

% UI

Quarter 1

4 584

149

17.7

12 454

37.3

Quarter 2

3 952

226

26.8

5 793

17.3

Quarter 3

5 492

301

35.7

8 819

26.4

Quarter 4

5 967

166

19.7

6 337

19.0

19 995

842

100.0

33 403

100.0

Total

Source: Department of Labour, Labour Centres Free State: January – December 2002 27

Labour Market Review, September 2003 On the basis of these data, on the one hand, the placement rate in the formal sector was very low. In order words, the supply of labour has been much higher than the demand in the province as a whole. Of 19 995 people who registered as seeking for employment, only 4,2% (842) people have been placed either in the informal or formal sector in the province. Between quarters, the highest percentage rate of placement was in Quarter 3 (35,7%) and the lowest in Quarter 1(17,7%). On the other hand, 33 403 unemployment insurance applications were received in 2002. Out of the R134, 937,591 paid out in 2002, 82,5% (R111, 285,769) was for ordinary unemployment benefits and 8,6% (R11, 641,943) was for Death Benefits.

Northern Cape D em o g ra phic a n d socio -e c o no mic o v e r v ie w socio-e rv The Northern Cape Province, comprising 30% of the country’s landmass, is the largest of the nine South African provinces. On the contrary, it has the smallest population, which the 1996 census estimate at 840 321. Thus the province accounted for 2,1% of SA’ s total population of 40 583 573. The province is vast and sparsely populated. This adversely affects costs and ease of service delivery. The province is divided into five regions. Frances Baard (346 672) has the largest population, with Kimberley as the administrative and political centre of the province. The other regions are Siyanda (163 350), centre of the agricultural industry; Karoo (128 861); Kgalagadi (86 122); and Namaqualand (115 316). The Northern Cape Province has the third highest per capita income of all nine provinces. Income distribution is, however, extremely skewed, with 51% of the population living in poverty. More than 96% of the provincial government’s income is received from national government. The bulk of the provincial budget received is spent on education, welfare, health and administration. Very little is spent on capital and development investment.

Sk i l l s a n d edu ca t ion tion Education is at the heart of South Africa’s transition to a sustainable, non-racial and non-sexist democracy and qualitative economic development and growth. The poor quality of education, especially among Blacks and Africans in particular, has resulted in a shortage of skills that retards economic growth and manifests itself in persistent unemployment.

Em p l o ym y m en t a n d u n emp l o y me nt Table 5 indicates the unemployment trends for South Africa and the Northern Cape from 1996 to 2002, using the official definition of unemployment. (For each year there are two Labour Force Survey (LFS) figures, as this survey is conducted twice annually – one in February, and one in September).

28

Labour Market Review, September 2003 Ta b bll e 5 U n e m p loym en t tren ds fo r S o uth Af loymen A fr ic a a nd th e N o r t h ern Ca pe 1 9 9 6 - 2 00 0 02 1996

%

1997

%

1998

%

1999

%

2000

2001

2001

2002

2002

LFS 2

LFS 1

LFS 2

LFS 1

LFS 2

%

%

%

%

%

South Africa

20.3

22.0

25.2

23.3

25.8

26.4

29.5

29.4

30.5

Northern Cape

12.6

19.6

17.9

18.1

22.1

26.2

26.1

30.0

24.2

Source: OHS 1996 – 1999; Labour Force Survey February 2000 – September 2002 Table 5 shows a steady increase for the country as a whole, and a steady increase for the Northern Cape as well, except from 1997 to 1998. While Northern Cape’s unemployment level was far below that at the national level in 1996, by February 2002 it was marginally higher. During September 2002 a lower percentage was however, recorded. It appears that 1996 might have been an aberration. There was a smaller sample that year for the OHS because of the census, which might have affected the Northern Cape due to its demographic profile.

KwaZulu-Na tal The KwaZulu-Natal (KZN) Province stretches along the eastern seaboard of South Africa from the Southern borders of Swaziland and Mozambique to the Eastern Cape border in the South. On the inland it is flanked by the Kingdom of Lesotho, the Free State and the Gauteng Province. KZN covers 92 100 square kilometers of land and is SA ‘s third smallest Province. However, the province is the most densely populated and contributes 20.5% of the country’s total population. KZN is one of the country’s leading tourism destinations.

Eco n o mic a ct ivit y The province’s economy is largely driven by its gateway status into and out of Southern Africa via its two ocean ports – Durban and Richards Bay. The Gross Geographic Product (GGP) of the Province comprise diverse economic sources, whose total contribution to the country’s Gross Domestic Product (GDP) is 12.5%. Table 6 shows the contributions from the Province’s main economic sectors

29

Labour Market Review, September 2003 Ta b bll e 6 K wa Z u l u Na ta -Na t a l gross ge o g rap h ic p ro r o d uc t p e r s e c to r Sector

% of KZN GDP

KZN % of SA’s GDP

Agriculture, Forestry and Fishing

3.0

10.2

Mining and Quarring

0.6

1.1

26.8

18.4

Electricity and Water

2.3

9.0

Construction

3.1

13.6

Trade and Catering

12.5

12.0

Transport and Communication

12.3

15.3

Finance and Real Estate

14.5

9.4

Community Services

24.9

13.6

Total

100

12.5

R 91.3

R 728.2

Manufacturing

R Billion (Source: WEFA, 1999)

The gateway status of KZN is an engine of investment in the manufacturing sector, as well as in modern, sophisticated, advanced and well-developed logistics and financial sectors. Other crucial sectors, which contribute significantly to the provincial economy, include agriculture, informal trading and the arts and crafts.

Labour market conditions The economically active population (EAP) constitutes 30% of the provincial population. Males and females constitute 54% and 46% respectively. The unemployment rate is 33.5% - the second highest among SA provinces. Moreover KZN has one of the highest incidence of HIV/ AIDS infection, which further blights the province’s development profile. The bulk of the economically active are mainly absorbed in the Manufacturing and Community Services Sectors within the formal economy and the Wholesale and Retail Sector in the informal economy. See Tables 7 and 8.

30

Labour Market Review, September 2003 Ta b bll e 7 Fo r m a l em ploymen employm en t per s e c to r Sector

Number of employees

Manufacturing

257 125

Community Service

246 931

Households

110 831

Trade

109 813

Agriculture

105 508

Finance

78 285

Transport, Storage and Communication

46 360

Construction

49 275

Electricity, Water and Gas

7 918

Mining and Quarrying

7 026

Total

1 019 072

(Source: WEFA, 1999)

Ta b bll e 8 In fo r m a l em ploymen employm en t p e r s e c to r Sector

Number of employees

Manufacturing

33 181

Construction

30 306

Wholesale and Retail

136 211

Finance and Insurance

7 082

Transport

8 959

Community and Social Services Total

25 926 241 665

(Source: WEFA, 1999)

31

Labour Market Review, September 2003

Book Review Redi scovering the coopera tive a dva nta ge: poverty reduction through self-help ( By J o hn ston st on Birch a ll, 2 003 ) Confronted with challenges of high and ever rising unemployment and high poverty rates, a number of interventions and measures have been proposed. This book is a valuable and timely contribution with very interesting arguments for the role and potential of cooperatives in poverty reduction. The book has been released at a time when we in South Africa are in a process of developing a Cooperatives Policy and there is a debate about building a strong and more efficient and effective cooperatives movement.

Key Issues The book is about the role and the potential of cooperatives in poverty reduction. Birchall also explores and discusses in greater detail the concepts of poverty and cooperatives. Four central arguments are pursued in this book. Firstly, the book argues that the cooperatives have a great potential to reduce poverty as part of a wider set of more or less formal self-help organisations. Therefore, the cooperatives should only be used if the poor themselves see their potential in poverty reduction. Secondly, the cooperatives and other self-help organisations have a potential to contribute to the poverty reduction strategies of a wide range of international organisations that have the responsibility for achieving the Millennium Development Goals, especially the World Bank’s Poverty Reduction Strategy Papers and the Decent Work strategy of the International Labour Organisation (ILO). Thirdly, based on evidence from 11 case studies illustrating various types of cooperatives in both developed and developing countries, Birchall concludes that the cooperatives could be adapted successfully to address the economic problems of the poor. However, this would entirely depend to a great extent on the promotional efforts, attention to detail and investment in human capital. Fourthly and lastly, Birchall focusing on the relationship between cooperative development and the process of participatory development argues that the development of cooperatives and other self-help organisations are vital aspects of participatory development. Also, the sustainability of wider development depends on some form of self-help organisation of the poor. The book concludes that self-help organisations by the poor such as the cooperatives, is an important precondition for the success of anti-poverty work. For the cooperatives to be effective in fulfilling this function, Birchall argues that there is a need for: ● ● ●

an appropriate environment that enables cooperatives to be true to their principles serious promotional efforts by the different social actors strong focus on human resource development.

Value of the book Whilst there has been little mention of the role and potential of cooperatives in poverty-reduction 32

Labour Market Review, September 2003 literature, this book should be welcomed for its attempt to broaden the manner in which poverty reduction has been addressed around the world, including in South Africa. The book has illustrated that the cooperatives are also important in our quest for poverty reduction. It provides us with a basis and tools to interrogate the problematic area of poverty reduction in South Africa. Clearly, this book requires much attention especially in our cooperatives policy formulation process. As the cooperatives movement is in the infancy stages in South Africa, this book will assist the movement to locate their contribution in poverty reduction and surely will introduce and encourage the debate we need, to build stronger efficient and effective cooperatives movement in the country. -------------------------------------------------------------------------------------------------------------------------------------Sabata Nakanyane is a Senior Researcher in the Labour Market Policy Chief Directorate of the Department of Labour. The book is published by the Cooperative Branch of the International Labour Office, Geneva.

33

Labour Market Review, September 2003

Sta tistical a nnexes I.

Popula tion a nd labour force

I. 1

O verview: Employed Unemployed Economically active population (labour force) Not economically active population Population of working age Unemployment rate Labour force participation rate Labour absorption rate.

II.

Employment

II.1 II.2 II.3 II.4 II.5

Employed Employed Employed Employed Employed

by by by by by

population group and gender sector industry occupation industry (establishment surveys).

Sk ills developmen developm en t II.6 II.7 II.8 II.9

Employed gender Employed gender Employed gender Employed gender.

workers participating in NQF-1 learning programmes by population group and workers who completed NQF-1 learning programmes by population group and workers participating in structured learning programmes by population group and workers who completed structured learning programmes by population group and

Employm en t equ ity Em ploymen II.10 II.11 II.12

Employed workers reported in employment equity reports by population group Top management reported in employment equity reports by population group Senior management reported in employment equity reports by population group.

III. Unemployment III.1 III.2

Unemployed by population group and gender Unemployment rate by population group and gender.

Employm en t servic e s Em ploymen III.3 III.4 III.5 III.6 III.7

34

Registered job seekers by province Registered job seekers by educational attainment Number of persons trained by province Number of persons trained by population group, gender and age group Job placements by province

Labour Market Review, September 2003 Une mploym en t in s ura nc e em ploymen III.8 III.9 III.10 III.11

Unemployment Unemployment Unemployment Unemployment

Insurance Insurance Insurance Insurance

Fund Fund Fund Fund

– beneficiaries by gender - applications approved by type - benefits paid by type - benefits paid by provincial office.

IV. Labour rela tions IV.1 IV.2 IV.3 IV.4 IV.5 IV.6

Registered employers’ and workers’ organisations Number of industrial actions by industry Number of employees involved in industrial action by industry Number of workdays lost due to industrial action by industry Number of workhours lost due to industrial action by industry Number of industrial actions by province.

Co m mission mm ission for Conc il ia tio n, M e d ia tio n a nd A r b itr it ra tion t ion (CCMA) IV.7

Activities of the Commission for Conciliation, Mediation and Arbitration (CCMA)

V.

Health a nd sa fety

V.1

Inspections by type

Co m pen sa tion d mpen t ion F u n nd V.2

Activities of the Compensation Fund

VI. Economic environment VI.1

Overview: Real gross domestic product growth Labour productivity growth Nominal unit labour costs growth.

VII. Productivity VII.1 Productivity statistics

VIII. Sources

35

Labour Market Review, September 2003 ANNEX I.

Popula tion a nd labour force

I. 1 O v e rview Year a

Employed

b

Unemployed (official definition)

c=a+b

2000

2001

2002

Unit

11 712

10 833

11 029

000

4 082

4 525

4 837

000

Economically active population (labour force)

15 794

15 358

15 866

000

d

Not economically active population

11 100

12 006

12 118

000

e=c+d

Population of working age

26 894

27 364

27 984

000

f=100*b/c

Unemployment rate (official definition)

25.8

29.5

30.5

%

g=100*c/e

Labour force participation rate

58.7

56.1

56.7

%

43.5

39.6

39.4

%

11 712

10 833

11 029

000

h=100*a/e Labour absorption rate a

Employed

b

Unemployed (expanded definition)

6 559

7 698

7 925

000

c=a+b

Economically active population (labour force)

18 271

18 531

18 954

000

d

Not economically active population

8 623

8 834

9 031

000

e=c+d

Population of working age

26 894

27 365

27 985

000

f=100*b/c

Unemployment rate (expanded definition)

35.9

41.5

41.8

%

g=100*c/e

Labour force participation rate

67.9

67.7

67.7

%

43.5

39.6

39.4

%

h=100*a/e Labour absorption rate

Sources: Stats SA 2003. Labour force survey (September 2002), Statistical Release P0210, Statistics South Africa, Pretoria, March 2003 (see Annex VII for a list of all sources) Notes: As shown in the two panels above, the definition of unemployment affects a range of labour market indicators including the unemployment rate and the labour force participation rate. According to the official definition (upper panel), the unemployed are those people within the economically active population who: (a) did not work during the seven days prior to the interview, (b) want to work and are available to start work within a week of the interview, and (c) have taken active steps to look for work or to start some form of self-employment in the four weeks prior to the interview. The expanded number of unemployed (lower panel) are those people who meet criteria (a) and (b), but not necessarily (c). See (2) Stats SA 2003.

36

Labour Market Review, September 2003 ANNEX II.

Employment

II. 1 E m p loyed by popu la tio n g r o up a nd g e nd e r Year

2000

All

2001

11 712

2002

Unit

10 833

11 029

000

Female

4 783

4 841

000

Male

6 049

6 184

000

7 024

7 239

000

Female

3 142

3 208

000

Male

3 882

4 028

000

3 785

3 789

000

Female

1 631

1 632

000

Male

2 154

2 156

000

African

Other

Sources: Stats SA 2002 and 2003. Labour force surveys (September 2001 and 2002), Statistical Release P0210, Statistics South Africa, Pretoria, March 2002 and 2003

II. 2 Em ployed by sect or sector Year All

2000

2001

2002

Unit

11 712

10 833

11 029

000

6 842

6 873

7 034

000

Employed in commercial agriculture

667

666

811

000

Employed in subsistence or small-scale agriculture

965

359

520

000

1 933

1 873

1 703

000

999

916

875

000

Employed in the formal sector (excluding agriculture)

Employed in the informal sector Employed in domestic service

Sources: Stats SA 2002 and 2003. Labour force surveys (September 2001 and 2002), Statistical Release P0210, Statistics South Africa, Pretoria, March 2002 and 2003

37

Labour Market Review, September 2003 II. 3 Em ployed by in du stry str y Year

2000

All

2001

2002

Unit

11 712

10 833

11 029

000

1 694

1 051

1 347

000

531

487

499

000

1 576

1 605

1 631

000

82

95

81

000

639

594

570

000

2 426

2 397

2 177

000

Transport, storage and communication

551

543

550

000

Financial intermediation, insurance, real estate and business services

928

975

1 021

000

Community, social and personal services

1 994

1 988

2 046

000

Private households with employed persons

1 205

1 055

1 041

000

Agriculture, hunting, forestry and fishing Mining and quarrying Manufacturing Electricity, gas and water Construction Wholesale and retail trade

Sources: Stats SA 2002 and 2003. Labour force surveys (September 2001 and 2002), Statistical Release P0210, Statistics South Africa, Pretoria, March 2002 and 2003

II. 4 E m p loyed by occu pa tio n Year All

2001

2002

Unit

10 833

11 029

000

Legislators, senior officials and managers

661

710

000

Professionals

485

468

000

Technical and associate professionals

1 146

1 225

000

Clerks

1 101

1 133

000

Service workers and shop and market sales workers

1 396

1 226

000

469

669

000

Craft and related trades workers

1 434

1 403

000

Plant and machine operators and assemblers

1 085

1 079

000

Elementary occupations

2 115

2 202

000

916

875

000

25

000

15

000

Skilled agricultural and fishery workers

Domestic workers Other Unspecified

17

Sources: Stats SA 2002 and 2003. Labour force surveys (September 2001 and 2002), Statistical Release P0210, Statistics South Africa, Pretoria, March 2002 and 2003 38

Labour Market Review, September 2003 II. 5 Em ployed by in du stry str y (e s tab l is h me nt s urv e ys ) Year

2001

All

2002

Unit

4 649

4 703

000

407

416

000

1 260

1 289

000

39

39

000

Construction

213

214

000

Wholesale and retail trade

892

887

000

Transport, storage and communication

209

200

000

Financial intermediation, insurance, real estate and business services

192

187

000

1 437

1 471

000

Mining and quarrying Manufacturing Electricity, gas and water

Community, social and personal services

Sources: Stats SA 2003. Comparative labour statistics. Survey of employment and earnings in selected industries (December 2002). Statistics South Africa, Pretoria, March 2003

II. 6 Em ployed workers work ers p artic ip a ting in N Q F-1 l e ar ning p r o g ra mm es by popu la tio n g r o up a nd g e nd e r m mes Year All

2001

2002

Unit

87.7

445.8

000

Female

28.3

77.0

000

Male

59.3

252.2

000

72.9

225.9

000

Female

21.8

49.5

000

Male

51.1

176.3

000

14.8

103.3

000

Female

6.5

27.4

000

Male

8.3

75.9

000

116.6

000

African

Other

Unspecified

Sources: Department of Labour, Directorate of the Skills Development Planning Unit (data may be subject to revision in the next Labour Market Review).

39

Labour Market Review, September 2003 II. 7 E m p loyed work ers w h o c o mp l e te d NQ workers N Q F-1 l e ar ning p r o g ra mm es by popu la tio n g r o up a nd g e nd e r m mes Year

2001

All

2002

Unit

2.2

267.3

000

Female

0.7

56.9

000

Male

1.6

209.6

000

1.5

151.9

000

Female

0.5

25.6

000

Male

1.0

126.4

000

0.7

114.5

000

Female

0.2

31.3

000

Male

0.5

83.2

000

0.9

000

African

Other

Unspecified

Sources: Department of Labour, Directorate of the Skills Development Planning Unit (data may be subject to revision in the next Labour Market Review).

II. 8 Em ployed workers work ers p artic ip a ting in s tr uc tur e d l e a r n i ng progra mm es by m mes b y p o p ul a tio n g r o up a nd g e nd e r Year All

2001

2002

Unit

1 426.9

2 278.7

000

Female

982.3

938.6

000

Male

444.6

1.340.1

000

1 041.3

1 014.3

000

Female

848.8

331.7

000

Male

192.6

682.6

000

385.5

1 264.3

000

Female

133.5

606.9

000

Male

252.1

657.5

000

African

Other

Sources: Department of Labour, Directorate of the Skills Development Planning Unit (data may be subject to revision in the next Labour Market Review).

40

Labour Market Review, September 2003 II. 9 Em ployed workers work ers w h o c o mp l e te d s tr uc tur e d l e a r n i ng progra mm es by m mes b y p o p ul a tio n g r o up a nd g e nd e r Year All

2001

2002

Unit

175.6

856.5

000

38.2

418.5

000

137.4

362.4

000

61.3

294.3

000

Female

10.2

119.9

000

Male

51.1

174.4

000

114.3

486.6

000

Female

28.0

298.7

000

Male

86.3

187.9

000

75.6

000

Female Male African

Other

Unspecified

Sources: Department of Labour, Directorate of the Skills Development Planning Unit, data may be subject to revision in the next Labour Market Review

II. 1 0 E mployed work ers re p o rte d in e mp l o yme nt e q uit y workers r e p o r t s by popu la t ion g r o up Year

2001

Unit

All

2 394.6

000

African

1 409.9

000

984.7

000

Other

Sources: Department of Labour, Commission for Employment Equity, 2002

II. 1 1 To p m a n a gem en t rep o rte d in e mp l o yme nt e q uity ma r e p o r t s by popu la t ion g r o up Year

2001

All African Other

Unit 100

%

8

%

92

%

Sources: Department of Labour, Commission for Employment Equity, 2002

II. 1 2 S en ior m a n a gement re p o rte d in e mp l o yme nt ma eq u i t y report s by popul a tio n g r o up reports Year All

2001

Unit 100

%

African

10

%

Other

90

%

Sources: Department of Labour, Commission for Employment Equity, 2002

41

Labour Market Review, September 2003 ANNEX III.

Unemployment

III. 1 U nem ployed by popul nemployed pop ul a tio n g ro r o up a nd g e nd e r Year All

2000

2001

2002

Unit

4 082

4 525

4 837

000

* * * * * * * *

2 386

2 577

000

2 139

2 259

000

3 929

4 213

000

2 081

2 248

000

1 848

1 965

000

595

624

000

304

329

000

291

294

000

Female Male African Female Male Other Female Male

Sources: Stats SA 2002 and 2003. Labour force surveys (September 2001 and 2002), Statistical Release P0210, Statistics South Africa, Pretoria, March 2002 and 2003 Note: * Statistics not available

III. 2 U n e m ploymen mploym en t ra te b y p o p ul a tio n g r o up a nd gender Year All Female Male African Female Male Other Female Male

2000

2001

2002

Unit

25.8

29.5

30.5

%

* * * * * * * *

33.3

34.7

%

26.1

26.8

%

35.9

36.8

%

39.8

41.2

%

32.3

32.8

%

13.6

14.1

%

15.7

16.8

%

11.9

12.0

%

Sources: Stats SA 2002 and 2003. Labour force surveys (September 2001 and 2002), Statistical Release P0210, Statistics South Africa, Pretoria, March 2002 and 2003 Note: * Statistics not available

42

Labour Market Review, September 2003 III. 3 Registered Regist ered job seeke rs b y p ro v inc e Year

1999

All

2000

2001

Unit

521.6

452.7

307.1

000

Eastern Cape

46.7

43.2

36.2

000

Free State

34.3

33.9

16.0

000

Gauteng North

57.6

30.3

11.4

000

Gauteng South

90.1

83.1

68.3

000

KwaZulu-Natal

79.6

49.4

23.9

000

Limpopo Province

32.3

19.2

8.0

000

Mpumalanga

62.2

94.5

83.2

000

Northern Cape

16.5

19.4

13.5

000

North West

35.4

32.0

23.3

000

Western Cape

66.9

47.7

23.3

000

Sources: Department of Labour, Provincial Offices

III. 4 R e gistered gist ered job seeke rs b y e d uc a tio nal a ttainme n t Sources: Year

1999

All

2000

2001

Unit

521.6

452.7

307.1

000

3.6

2.0

2.2

000

Under standard 6

98.5

87.4

57.7

000

Standard 6-7

85.3

74.8

51.7

000

Standard 8-9

137.6

119.6

84.9

000

Standard 10

176.7

149.5

97.3

000

19.9

19.4

13.4

000

Special school

Higher than standard 10 Department of Labour, Provincial Offices

43

Labour Market Review, September 2003 III. 5 N u mber of person s traine d b y p ro v inc e Year

1999

2000

2001

2002

Unit

All

67.9

47.0

83.9

13.3

000

Eastern Cape

15.8

13.1

21.8

5.3

000

Free State

7.2

0.6

5.0

1.0

000

Gauteng North

5.0

1.3

5.1

0.5

000

Gauteng South

4.8

1.9

5.7

2.0

000

KwaZulu-Natal

4.3

4.0

9.7

0.8

000

Limpopo Province

8.8

7.7

6.5

0.5

000

Mpumalanga

5.8

3.8

6.4

0.6

000

Northern Cape

2.0

1.4

2.5

0.3

000

North West

9.7

9.1

14.3

1.5

000

Western Cape

4.4

4.2

7.0

0.8

000

Sources: Department of Labour, Provincial Offices Notes: Data concerning the number of persons trained refer to financial years; the year 2000 thus refers to the financial year 2000/2001 etc. The number of persons trained in 2002 covers the period April-August only.

III. 6 N u mber of person s traine d b y p o p ul a tio n g r o up , g en d e r a n d a ge grou p Year All

1999

2000

2001

2002

Unit

67.9

47.0

83.9

13.3

000

African

*

41.5

75.4

12.4

000

Other

*

5.5

8.6

1.0

000

All

67.9

47.0

83.9

13.3

000

Female

38.5

25.3

46.3

8.3

000

Male

29.4

21.8

37.6

5.0

000

All

67.9

47.0

83.9

13.3

000

15-18

1.4

1.0

1.4

0.1

000

19-25

21.4

17.0

25.3

3.2

000

26-35

24.9

16.3

29.3

4.6

000

36-45

12.3

7.1

15.3

3.0

000

46-65

7.9

5.5

12.6

2.5

000

Sources: Department of Labour, Provincial Offices Notes: Data concerning the number of persons trained refer to financial years; the year 2000 thus refers to the financial year 2000/2001 etc. The number of persons trained in 2002 covers the period April-August only.

44

Labour Market Review, September 2003 III. 7 J o b pla cem en t s by p ro v inc e Year

1999

All

2000

2001

Unit

26.2

17.4

14.5

000

Eastern Cape

2.7

0.8

1.7

000

Free State

0.5

1.0

1.0

000

Gauteng North

1.8

0.4

0.2

000

Gauteng South

3.0

2.2

2.4

000

KwaZulu-Natal

4.5

2.7

1.6

000

Limpopo Province

1.9

1.4

0.4

000

Mpumalanga

4.7

4.8

4.6

000

Northern Cape

1.0

0.5

0.5

000

North West

3.1

1.9

1.4

000

Western Cape

3.1

1.7

0.8

000

Sources: Department of Labour, Provincial Offices

III. 8 U n e m ploymen mploym en t In s ura nc e F und - b e ne fic iarie s b y gender Year All

1999

2000

2001

Unit

4 223

3 988

3 619

000

Female

*

1 349

1 301

000

Male

*

2 639

2 318

000

Sources: Department of Labour, Directorate of Labour Market Information and Statistics (LMIS)

III. 9 U n e m ploymen mploym en t In s ura nc e F und – ap p l ic a tio ns a p p r o ved by type t ype Year

1999

2000

2001

Unit

All

769

674

637

000

Unemployment

665

577

544

000

Illness

23

18

17

000

Maternity

61

57

55

000

Dependents

20

22

21

000

Sources: Department of Labour, Directorate of Labour Market Information and Statistics (LMIS)

45

Labour Market Review, September 2003 III. 1 0 U nemploym en t In s ura nc e F und – b e ne fits p aid b y nem ploymen type Year

1999

2000

2001

Unit

All

2 984

2 905

2 838

Rand million

Unemployment

2 536

2 160

2 365

Rand million

Illness

108

222

106

Rand million

Maternity

223

639

236

Rand million

Dependants

117

217

131

Rand million

0

(333)

0

Rand million

Delayed benefits previous year

Sources: Department of Labour, Directorate of Labour Market Information and Statistics (LMIS)

III. 1 1 U n e m ploymen mploym en t In s ura nc e F und – b e ne fits p aid b y P r o v i ncia l Of fice Year All

2001

Unit 2 837

Rand million

Eastern Cape

122

Rand million

Free State

208

Rand million

Gauteng North

365

Rand million

Gauteng South

434

Rand million

KwaZulu-Natal

574

Rand million

Limpopo Province

105

Rand million

Mpumalanga

213

Rand million

64

Rand million

North West

167

Rand million

Western Cape

585

Rand million

Northern Cape

Sources: Department of Labour, Directorate of Labour Market Information and Statistics (LMIS)

46

Labour Market Review, September 2003 ANNEX IV.

Labour rela tions

IV . 1 Registered Regist ered employe r s ’ a nd w o rke r s ’ o r g a nis a tio n s Year Registered trade unions

1999

2000

2001

2002

499

464

485

504

Members of registered trade unions

3 359.9

3 552.1

3 939.1

4 069.0

Registered employers’ organisations

260

252

265

270

Unit number 000 number

Sources: Department of Labour, Directorate of Collective Bargaining

IV . 2 N um ber of in du st rial umber str ial a c tio ns b y ind us try Year All

1999

2000

2001

2002

Unit

107

80

83

47

number

8

15

6

1

number

Mining and quarrying

14

11

7

5

number

Manufacturing

30

16

22

9

number

Electricity, gas and water

2

3

1

1

number

Construction

3

3

5

3

number

12

6

2

11

number

Transport, storage and communication

9

6

14

4

number

Financial intermediation, insurance, real estate and business services

1

3

Community, social and personal services

28

17

Agriculture, hunting, forestry and fising

Wholesale and retail trade

National and provincial stay-aways

number 23

12

3

Anti-privatisation strike

number number

1

number

Sources: Department of Labour, Directorate of Labour Market Information and Statistics (LMIS)

47

Labour Market Review, September 2003 IV . 3 N um ber of employe e s inv o l v e d in ind us trial umber em ployee tr ial a c tio n by i nd u st ry stry Year

1999

2000

555.4

1 142.4

90.4

66.3

000

5.8

2.2

0.8

0.4

000

Mining and quarrying

64.3

170.2

12.4

12.5

000

Manufacturing

53.0

63.9

32.7

5.3

000

0.4

0.0

2.1

0.0

000

12.4

17.1

1.1

0.3

000

2.2

11.8

0.0

1.4

000

Transport, storage and communication

62.2

118.8

11.0

3.4

000

Financial intermediation, insurance, real estate and business services

0.1

0.0

354.6

758.5

All Agriculture, hunting, forestry and fising

Electricity, gas and water Construction Wholesale and retail trade

Community, social and personal services National and provincial stay-aways

2001

2002

Unit

000 16.3

33.8

13.9

Anti-privatisation strike

000 000

9.2

000

Sources: Department of Labour, Directorate of Labour Market Information and Statistics (LMIS)

IV . 4 N um ber of workday s l o s t d ue to ind us tr ial a c tio n umber work days by i nd u st ry stry Year

1999

2000

2001

2002

Unit

2 625.5

1 670.0

953.6

615.7

000

93.7

10.5

13.1

4.4

000

Mining and quarrying

266.6

364.2

229.0

94.5

000

Manufacturing

225.6

127.3

412.7

41.9

000

0.8

1.3

5.6

0.0

000

113.2

18.1

5.9

3.1

000

93.8

104.5

0.1

15.4

000

443.4

121.8

188.6

4.7

000

0.4

0.0

1 338.1

922.3

All Agriculture, hunting, forestry and fising

Electricity, gas and water Construction Wholesale and retail trade Transport, storage and communication Financial intermediation, insurance, real estate and business services Community, social and personal services National and provincial stay-aways Anti-privatisation strike

000 66.7

433.9

31.9

000 17.8

Sources: Department of Labour, Directorate of Labour Market Information and Statistics (LMIS)

48

000 000

Labour Market Review, September 2003 IV . 5 N um ber of workhours umber work ho urs l o s t d ue to ind us trial ac t i o n by in du stry ct st ry Year

1999

2000

Unit

20 651.1

14 225.5

000

677.9

84.5

000

Mining and quarrying

1 838.3

3 744.6

000

Manufacturing

2 288.8

1 663.8

000

5.1

16.8

000

Construction

901.9

144.4

000

Wholesale and retail trade

546.6

574.4

000

3 605.6

994.4

000

3.7

0.2

000

10 783.1

7 002.3

000

National and provincial stay-aways

0

0

000

Anti-privatisation strike

0

0

000

All Agriculture, hunting, forestry and fising

Electricity, gas and water

Transport, storage and communication Financial intermediation, insurance, real estate and business services Community, social and personal services

Sources: Department of Labour, Directorate of Labour Market Information and Statistics (LMIS)

IV . 6 N um ber of in du st rial umber str ial a c tio ns b y p ro v inc e Year All

2002

Unit 56

number

Eastern Cape

3

number

Free State

2

number

Gauteng

20

number

KwaZulu-Natal

11

number

Limpopo Province

2

number

Mpumalanga

3

number

Northern Cape

1

number

North West

5

number

Western Cape

7

number

National and provincial stay-aways

1

number

Anti-privatisation strike

1

number

Sources: Department of Labour, Directorate of Labour Market Information and Statistics (LMIS) Notes: The overall number of industrial actions by province differs from the national overall number by industry due to the fact that some actions affected one establishment or organisation in different provinces and some took place in all provinces.

49

Labour Market Review, September 2003 IV . 7 A c tivit t ivit ies of t he Commis C o mmis s io n fo r C o nc il ia tio n, M e d i a tion t ion a n d Arbitr Arbit ra tio n ( C C M A) Year CCMA: number of referrals

2001

2002

110.7

118.0

000

CCMA: number of jurisdictional referrals

75.5

76.9

000

CCMA: number of cases conducted and closed

42.7

40.7

000

CCMA: number of cases settled

27.6

28.8

000

Sources: Department of Labour, Commission for Conciliation, Mediation and Arbitration

50

Unit

Labour Market Review, September 2003 ANNEX V.

Health a nd sa fety

V . 1 In s pection pect ion s by type Year

2002

Unit

All

5 443

number

Safety inspections

2 719

number

845

number

1 745

number

Hazardous substance investigations

66

number

Registered entity investigations

68

number

Special safety inspections Incident investigations

Sources: Department of Labour, Chief Directorate of Occupational Health and Safety

V . 2 A c tivit t ivit ies of t he Comp e ns a tio n F und Year

2000

2001

Unit

Compensation Fund: accidents reported

223.6

280.6

000

Compensation Fund: diseases reported

3.4

3.5

000

60.8

45.2

000

not available

245.5

000

Compensation Fund: compensation awards Compensation Fund: claims registered

Sources: Department of Labour, Compensation Fund Notes: Data concerning the activities of the Compensation Fund refer to financial years; the year 2000 thus refers to the financial year 2000/2001 etc.

51

Labour Market Review, September 2003 ANNEX VI.

Economic environment

V I. 1 O verview Year

2000

2001

2002

Unit

Real gross domestic product growth

3.5

2.8

2.0

%

Labour productivity growth

6.3

4.8

* 2.7

%

Nominal unit labour costs growth

2.7

4.1

* 11.1

%

Sources: SARB 2003. Quarterly Bulletin No. 227, South African Reserve Bank, Pretoria, March 2003. * Note: These are figures for the third quarter, 2002 only.

52

Labour Market Review, September 2003 ANNEX VII. Productivity V II. 1 P r o du ct ivit y sta tis ctivit t is tic s

Year

Real output index

Employment number

Real MultiFixed Earnings Fixed Labour earnings Unit factor capital per capital producper labour producproduc- employee input tivity employee cost tivity tivity (rand per index index (rand per index index index annum) annum)

Capital labour ratio index

1990

95.1 4 099 987

96.6

90.7

84.7

98.4

25 519

45 538

62.3

86.1

1991

93.3 3 952 639

97.3

90.4

86.1

95.8

29 782

44 055

71.5

89.9

1992

92.1 3 807 889

97.6

91.1

88.3

94.4

34 523

44 845

80.8

93.6

1993

92.6 3 679 160

97.9

93.2

91.9

94.5

38 988

46 160

87.8

97.2

1994

95.4 3 625 666

98.7

96.4

96.0

96.7

43 086

46 827

92.8

99.4

1995

100.0 3 651 568

100.0

100.0

100.0

100.0

48 347

48 347

100.0

100.0

1996

103.8 3 646 831

101.8

102.9

104.0

102.0

52 877

49 255

105.2

107.9

1997

107.3 3 555 382

103.9

106.4

110.2

103.3

59 318

50 880

111.3

106.7

1998

108.8 3 399 156

106.3

108.8

116.9

102.4

68 164

54 703

120.6

114.2

1999

111.8 3 345 960

107.4

111.6

122.0

104.0

74 149

56 576

125.8

117.3

2000

116.5 3 267 970

108.5

116.4

130.2

107.4

81 035

58 696

128.7

121.2

2001

121.0 3 213 529

109.6

120.6

137.5

110.4

88 659

61 056

133.4

124.5

2002

125.1 3 207 973

110.9

123.4

142.4

112.8

95 882

62 975

139.2

126.3

Average annual growth rate 1989-96

1.1

-2.1

0.8

1.9

3.2

0.3

13.7

2.3

10.1

2.9

1996-97

3.1

-2.2

1.4

3.1

5.5

1.7

10.4

4.3

4.6

3.7

1997-98

1.4

-4.4

2.3

2.3

6.1

-0.8

14.9

7.5

8.3

7.0

1998-99

2.7

-1.6

1.1

2.6

4.3

1.5

8.8

3.4

4.3

2.7

1999-00

4.3

-2.3

1.0

4.3

6.8

3.3

9.3

3.7

2.4

3.4

2000-01

3.8

-1.7

1.0

3.6

5.6

2.8

9.4

4.0

3.6

2.7

2001-02

3.4

-0.2

1.2

2.4

3.6

2.2

8.1

3.1

4.4

1.4

Sources: National Productivity Institute Notes: Private economy, excluding agriculture 53

Labour Market Review, September 2003 ANNEX VIII. Sources D ep a r t m en t of La bou r re tm r e p o rts r ts : Department of Labour, Preliminary Annual Report 2001/2002, Pretoria, April 2002. Department of Labour, Annual Report of the Compensation Fund for the Financial Year ended 28 February 2002, Pretoria, July 2002. Department of Labour, Annual Report of the Unemployment Insurance Fund, January 2001-December 2001. Pretoria, July 2002. Department of Labour, National Skills Development Strategy Implementation Report April 2001 to March 2003, Pretoria, September 2002. Department of Labour, Annual Report of the Commission for Employment Equity, Pretoria, April 2003. Department of Labour, Strikes statistics. Annual Report 2002. Pretoria, undated.

O t h e r sou rces Department of Labour Programmes Stats SA 2002. Labour force survey (September 2001), Statistical Release P0210, Statistics South Africa, Pretoria, March 2002. Stats SA 2003. Labour force survey (September 2002), Statistical Release P0210, Statistics South Africa, Pretoria, March 2003. Stats SA 2003. Comparative labour statistics. Survey of employment and earnings in selected industries (December 2002). Statistics South Africa, Pretoria, March 2003. SARB 2003. Quarterly Bulletin No. 227, South African Reserve Bank, Pretoria, March 2003. National Productivity Institute

54

Labour Market Review, September 2003

55

Labour Market Review, September 2003

56