The Archive

Articles

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

Cape Town’s trade in wild medicines: ecological threat or essential livelihood resource?

Cape Town is the urban centrepiece of a globally unique and highly diverse natural environment which should take priority in conservation management. But these biological assets also directly serve a local market of over 5 100 traditional healers and herbalists. The author discusses this important informal economy, business and cultural activity in the face of the broadening threats to conservation in the region, and the growing potential tension this presents in terms of policy and management.

29 JAN 2014

How did hunger levels in the former homelands catch up with the rest of South Africa? A hundred years after the Land Act of 1913

A century after the Land Act of 1913, and 20 years after the abolition of homelands, differences in poverty persist between the former homeland areas and the rest of South Africa. However, remarkably, hunger gaps between the former homelands and other regions have been eliminated in the post-apartheid era. The main cause has been the disproportionately high number of persons eligible for social grants in the former homelands, rather than increased food production or higher labour market incomes due to land reform.

14 JAN 2014

Why are foreign-run spaza shops more successful? The rapidly changing spaza sector in South Africa

This article examines the contrasting business models in the spaza shop sector, and compares foreign-run businesses with South African businesses. We argue that foreign shop keepers are more successful than South Africans because of the strength of their social networks, which provide them with access to labour and capital and enable collective purchasing and market domination. The article argues for a two-pronged policy that would formalise larger shops whilst permitting and encouraging informal micro and survivalist businesses.

13 NOV 2013

The impact of youth employment incentives and wage subsidies: results of a trial run

The Employment Incentive Tax Bill offers tax subsidies to firms to employ new young workers. An evaluation of the impact of a wage subsidy voucher indicates that employment incentives increase the likelihood of young job-seekers being employed; they also increase the time young people remain employed. There is no evidence of older or existing workers being replaced. Such incentives are a relatively cheap and effective way to create employment, but are unlikely to create large numbers of jobs for young people.

29 OCT 2013

The matric certificate is still valuable in the labour market

Increasing levels of youth unemployment and learners’ poor performance at school have led to claims that the matric certificate no longer has much value in the labour market. However, the evidence does not support this claim. While the labour market conditions facing secondary school graduates have indeed worsened with time, the value of a matric certificate relative to that of grade 10 and 11 has remained positive both in terms of earnings and the likelihood of finding employment.

14 OCT 2013

What caused the increase in unemployment in the late 1990s? Were education policies partly responsible?

In the late 1990s the Department of Education restricted the re-enrolment of over-aged learners and the number of times underperforming learners could repeat a grade. This was intended to reduce the number of learners in the school system, but may have contributed to a sudden increase in measured unemployment. Of the 2.3 million increase in the number of unemployed between 1997 and 2003, up to 900 000 may be due to unintended effects of these policies which brought hidden (youth) unemployment into the open.

17 SEPT 2013

The effect of basic infrastructure delivery on welfare in rural and urban municipalities

Access to a comprehensive set of basic infrastructure services is essential to attain social development goals and ensure equal opportunity for all people to participate in a country’s economy. This article investigates whether the delivery of basic infrastructure has a significant positive effect on growth and development in South Africa and whether the effect is different for urban and rural municipalities. A complex picture emerges, necessitating care in making such infrastructure investment decisions.

03 SEPT 2013

Unlocking the growth and employment potential of business in the margins

Marginalised businesses provide livelihood and income opportunities for a large section of the population. However, these businesses are not able to capture growth opportunities because of several constraints; they continue to operate on the periphery of the mainstream economy. Yet they could become a major source of employment growth. Efforts to unlock this potential must concentrate on exploiting value chains and making government policy more responsive to the unique needs and challenges of marginalised businesses.

13 AUG 2013

The significant decline in poverty in its many dimensions since 1993

The measurement of poverty should include dimensions of well-being that cannot be measured in monetary terms. Data on health, education and standards of living can be used to calculate a so-called Multidimensional Poverty Index (MPI). Results suggest that both the prevalence and the intensity of multidimensional poverty fell significantly from 1993 to 2010. The decline in multidimensional poverty is much greater than the decline in poverty as measured in terms of income and/or expenditure. Better social services and infrastructure have played a large role.

29 JUL 2013

Is the middle class becoming better off? Two perspectives

Two very different pictures emerge when one compares income changes of the relatively affluent ‘middle class’ with those of people in the literal middle of the income spectrum. In the affluent middle there has been significant racial transformation and growth of the ‘black middle class’. However, households in the actual middle of the income spectrum have experienced the lowest income growth of all groups since 1993. Both perspectives are crucial for the pursuit of an equitable path of development.

15 JUL 2013

How do the non-searching unemployed feel about their situation? On the definition of unemployment

New evidence suggests that non-searching unemployed people are significantly less satisfied with their lives than people who are not economically active. Indeed, the non-searching unemployed have hit rock bottom. Assuming that people do not freely choose an unsatisfactory state of living, a case is made that the non-searching unemployed – or ‘discouraged workers’ – are involuntarily unemployed and should be included in the definition and measurement of the labour force. Consequently, a case is made for the adoption of the broad measure of unemployment.

25 JUN 2013

The impact of sectoral minimum wage laws in South Africa

The introduction of minimum wage laws in five non-agricultural sectors has not been associated with a significant loss in employment in the years following their promulgation – a period when most sectors also saw a significant increase in real hourly wages. Indeed, several sectors recorded an increase in employment. However, in some sectors there is evidence of a relatively small reduction in the hours worked by employees. On the whole, the effects of minimum wages are varied.

10 JUN 2013

How much do unions and bargaining councils elevate wages?

Past studies have found that trade union members earn substantially higher wages than non-union workers. New results suggest a much lower union wage premium (6-7%) when the impact of the size of the firm, the type of employment and non-wage benefits are properly taken into account. On the other hand, bargaining council agreements have a higher impact on wages than unions do, so that the cumulative wage premium of unions and bargaining councils averages more than 16%. For the public sector this can be as high as 22%.

28 MAY 2013

How high is graduate unemployment in South Africa? A much-needed update

The frequently reported ‘crisis in graduate unemployment’ in South Africa is a fallacy based on questionable research. Not only is graduate unemployment low at less than 6%, but it also compares well with rates in developed countries. The large expansion of black graduate numbers has not significantly exacerbated unemployment amongst graduates. Contrary to popular perception, such graduates – many from ‘formerly disadvantaged’ universities – have been snapped up by the private sector. Black graduates are, however, still more likely to be unemployed than white graduates.

12 MAY 2013

Who are the middle class in South Africa? Does it matter for policy?

The middle class is a hot topic in media and policy circles. But how should the middle class be defined, particularly in a country with high levels of inequality? Individuals and households which fall in the actual middle of the income distribution in South Africa have a standard of living well below a ‘middle-class lifestyle’. Defining the middle class on the basis of the ‘actual middle’ versus ‘relative affluence’ provides vastly different pictures. This necessitates great care in using these conceptions, especially in policy design.

29 APR 2013