The Archive

Articles

Accessible, evidence-based analysis on growth and inclusive development in South Africa.

Is the growth of labour productivity in manufacturing a good thing?

Labour productivity grew substantially in the first twenty years of democracy, but is this unequivocally good? Much of the increase has been driven by changes at the firm level. Smaller firms’ average labour productivity increased more than that of larger firms. This seems to reflect changes in the composition of firms and jobs – smaller firms and low-productivity jobs appear to be vanishing. This is worrying because these are the type of jobs we need to reduce unemployment.

27 FEB 2018

Meeting food security needs in very poor households in the Eastern Cape: the role of own agricultural production

Small-scale agriculture evokes strong views in terms of both its current and potential roles in rural development. We examine how many (or few) Black households in rural areas that are identified as ‘food poor’ in terms of their income levels are able to meet their basic food needs – and the role of household agricultural production. We find that although rural households engaged in some form of farming are more likely to be very poor in terms of their incomes, they actually experience hunger less frequently than non-farming households.

06 FEB 2018

Poor land governance stifles rural development and has knock-on effects in urban areas

Several researchers in the REDI3x3 project focused on poverty in rural areas in the Eastern Cape, which contains two former apartheid homelands, the Ciskei and the Transkei. This article analyses the main messages of this research, highlighting the negative impact of poor land governance and uncertainty of tenure; knock-on effects are apparent in areas like Hout Bay and Marikana. [An edited version of this article appeared in Business Day on 10 November 2017. See references.]

23 NOV 2017

Are we measuring poverty and inequality correctly? Comparing earnings using tax and survey data

Calculating the earnings Gini coefficient with survey data from the Quarterly Labour Force Survey (QLFS) may lead to an underestimation of inequality. When one compares earnings in the tax assessments data to those in the QLFS, it appears that the earnings of employees in the QLFS are underreported. Benefits and annual bonuses contribute substantially to the gap. In the case of self-employment incomes, the top earnings in the QLFS are also underreported, but the tax data seems to miss many mid- and low-income earners.

03 OCT 2017

Reservation wages found in surveys can be very misleading

The responses of unemployed workers to the typical survey question about their ‘lowest acceptable wages’ are susceptible to error and overestimation – particularly for people in persistent joblessness. Studies using only the responses to the standard question may incorrectly conclude that vulnerable workers are unemployed because they tend to price themselves out of employment – while in fact their responses are just unreliable and distorted indications of their true reservation wages. Alternative questions would give more reliable results.

12 SEPT 2017

Land and property rights: 'title deeds as usual' won’t work

Renewed emphasis in policy discourses on systematic land titling to solve insecure tenure in South Africa is understandable. A staggering two thirds of the citizenry hold off-register land rights. Converting these rights to title deeds may seem self-evident, but our research reveals major stumbling blocks. For a system of land records to succeed, its design must take into account well understood and familiar local and customary processes for holding, using and transmitting land in urban and rural areas.

22 AUG 2017

The former Transkei and Ciskei homelands are still poor, but is there an emerging dynamism?

The dominant perspective on the economic situation of the former homelands is that long-term, deliberate neglect has left a durable legacy of poverty and stagnation. While this may be largely correct, there is also evidence to suggest that the former homelands are dynamic. This article presents some evidence on population, employment and unemployment, in particular through a focus on the evolving nature of the linkages between former homeland towns and their rural environs.

02 AUG 2017

The Transkei Wild Coast: still waiting for something to happen

The Wild Coast, in the former Transkei Bantustan, is characterised by natural beauty and great poverty. Since 1994 rural land administration has collapsed, land tenure has not been reformed, a succession of coastal development plans have been proposed but not implemented – and communities have become disillusioned. The few tourist-related developments that have taken root have done so despite the general collapse of rural governance and are due largely to the determination of local developers and their community partners

11 JUL 2017

Technology and minimum wages are likely to change the mix of capital and labour in industry

While technology is making capital cheaper, policies like the national minimum wage will make labour more expensive. What does this mean for the choices firms make in terms of labour and capital inputs? This research shows that higher prices for labour will result in lower demand for labour, making job creation more difficult. Low-skilled and high-skilled labour are substitutes – higher wages for low-skilled workers will encourage firms to employ more high-skilled workers and become more skill intensive.

20 JUN 2017

A job in the informal sector reduces poverty about as much as a job in the formal sector

In the aggregate, earnings from jobs in the informal sector play a small role in reducing national poverty rates, especially because there are relatively few informal-sector jobs. However, if we compare on a per-job basis, the poverty reduction associated with one informal-sector job is generally between 50 to 100% of the poverty reduction associated with one formal-sector job. Growth in the number of jobs in the informal sector would be a sensible component of any plan to reduce poverty.

30 MAY 2017

‘You can’t bite the hand that feeds you’: Contracts between SME suppliers and the large supermarkets

This article examines the implications of the contracts between the four main South African supermarkets and their SME suppliers. Supermarkets’ procurement practices, in particular their practice of charging suppliers a substantial ‘rebate commission’ as well as requiring suppliers to comply with private, rather than public, production and health standards, have a significant impact on the ability of new SME suppliers to enter the market and to create jobs. This has important policy implications.

09 MAY 2017

Innovative joint ventures can boost agricultural production and promote agrarian transformation

Growing agriculture can reduce poverty, create economic opportunities in rural and peri-urban areas, and boost employment, particularly for semi- and unskilled workers. We review several successful joint ventures across South Africa which comprise a range of partnerships between smallholders, commercial farmers, agribusinesses, industry associations and government. Many of these partnerships have generated significant returns and transformational benefits. Well-designed joint ventures can complement existing government initiatives to drive more rapid agrarian transformation and increase production.

18 APR 2017

What makes the rand so volatile: global or home-made factors?

Exchange-rate volatility can complicate decisions concerning trade and investment and constrain a country’s economic growth. Understanding what contributes to a currency’s volatility is an important first step in assessing whether economic policy can reduce this volatility. For South Africa, changes in global commodity prices and financial-market risk perceptions drive most of the rand’s volatility. However, local political uncertainty also emerges as a significant source of volatility. More policy and political predictability could help to smooth the rand’s volatility.

30 MAR 2017

Could informal enterprises stimulate township economies? A study of two Midrand townships

Informal enterprises are perceived to lack the necessary business and economic fundamentals to stimulate their local economies. However, informal enterprises are not homogenous. In a study of non-retail informal enterprises, we distinguish between Traditional Informal Enterprises (TIEs) and Modernising Informal Enterprises (MIEs) and assess whether Ivory Park and Kaalfontein townships have MIEs to catalyse the local economies. We find that 40% of the non-retail enterprises have a modernising orientation, but that the majority are predominantly traditional.

28 FEB 2017

REDI3x3 conference: Policies for inclusive growth

The REDI3x3 research project has completed most of its research at a time when unemployment, poverty and inequality is intense. With growth at just 0.5%, government needs to become more innovative in fixing the social policies that hamper progress. It should draw on all the research evidence to find ways to transform the structure of the economy without inhibiting growth. Addressing education, low labour intensity, the informal sector and the spatial legacies of apartheid can make a real difference.

15 FEB 2017