By Reads

Creating jobs, reducing poverty I: Why the informal sector should be taken seriously and enabled properly

Reads 122,042
Frederick CvN Fourie on 23 July 2018

In the first extract from a new REDI3x3 book on the role of the informal sector in job creation and poverty reduction, a compact picture of the size, texture and impact of the sector is provided. One in every six South Africans who work, work in the informal sector. Several policy-relevant features are highlighted, such as industry, spatial and gender dimensions. This provides the backdrop for the second extract on the employment-creating performance of the informal sector.

What is the role of manufacturing in boosting economic growth and employment in South Africa?

Reads 107,617
Nimrod Zalk on 11 February 2014

There is a widespread view that countries no longer need to industrialise in order to develop. However, in South Africa manufacturing remains the core driver of GDP growth and direct employment while other sectors – particularly many services sectors – are likely to increase employment on the basis of growing demand flowing from a growing GDP. A nuanced understanding of the direct and indirect linkages through which diversified manufacturing growth can boost economy-wide employment is essential.

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

Reads 107,298
Justin Visagie on 29 April 2013

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.

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

Reads 99,305
Rory Liedeman, Andrew Charman, Laurence Piper, Leif Petersen on 13 November 2013

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.

Informal settlements: poverty traps or ladders to work?

Reads 98,518
Ivan Turok on 12 August 2015

Informal urban settlements have a poor reputation as hotspots of social unrest, squalor and crime. Yet there is another side to them: as communities that are determined to lift themselves out of poverty via jobs in the city. In a society marked by severe social and spatial inequalities, these places may be useful vehicles for upward mobility. The ambivalence of government policy towards informal settlements needs to be replaced by a more positive approach.

Adcorp’s employment and unemployment figures are not taken seriously by researchers – yet they can do much harm

Reads 96,648
Servaas van der Berg on 12 February 2013

Adcorp’s unemployment figures are derived from weak research and is repeated too often by gullible journalists. Based on a flawed methodology and dubious assumptions, the Adcorp figures imply that only about a million people are unemployed and that the total unemployment rate is 5%. At the same time, Adcorp has published an inflated figure for graduate unemployment (600 000) – a grave inconsistency. Whilst serious researchers will not touch Adcorp data, it can harm decision-making by policymakers and potential university students and their parents.

How much is inequality reduced by progressive taxation and government spending?

Reads 93,102
Ingrid Woolard, Rebecca Metz, Gabriela Inchauste, Nora Lustig, Mashekwa Maboshe, Catriona Purfield on 28 October 2015

Through progressive taxation and pro-poor social spending, the SA fiscal system reduces income inequality significantly. The extent of this reduction is larger than in twelve comparable middle-income countries measured similarly. Nevertheless, ‘final’ income (i.e. income after major taxes, government transfers and spending) remains more unequal than in comparator countries. While the fiscal system has an important role to play in reducing inequality, interventions to improve the distribution of wages, salaries and capital income are needed.

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

Reads 80,673
Hendrik van Broekhuizen, Servaas van der Berg on 12 May 2013

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.

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

Reads 72,891
Paul Cichello, Michael Rogan on 30 May 2017

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.

Who creates jobs, who destroys jobs? Small firms, large firms and labour market rigidity

Reads 72,569
Andrew Kerr, Martin Wittenberg, Jairo Arrow on 15 January 2013

Firm-level data for the period 2005 to 2011 indicate that job creation and destruction rates in South Africa are only slightly lower than among OECD countries. Around 10% of existing jobs are destroyed each year, while the number of new jobs is around 9.5% of existing employment. Larger firms have higher rates of net job creation than small firms. The relatively high reallocation of employment across firms suggests lower rigidities in the South African labour market than is sometimes believed.

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

by Henk Gnade (IHS Information and Insight) on 3/09/2013 reads 55,690
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Wealth inequality – striking new insights from tax data

by Anna Orthofer (Department of Economics, Stellenbosch University) on 24/07/2016 reads 48,782
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The impact of sectoral minimum wage laws in South Africa

by Haroon Bhorat (University of Cape Town) on 10/06/2013 reads 46,957
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The unemployed in South Africa: Why are so many not counted?

by Dorrit Posel (University of KwaZulu-Natal) on 26/02/2013 reads 46,928
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Reducing unemployment: Waiting for high growth? Waiting for Godot?

by Frederick Fourie (University of the Free State) on 12/03/2013 reads 45,720
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The impact of youth employment incentives and wage subsidies: results of a trial run

by Neil Rankin (Stellenbosch University) on 29/10/2013 reads 40,920
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Youth unemployment: what can we do in the short run?

by Lauren Graham (Centre for Social Development in Africa, University of Johannesburg) on 12/12/2016 reads 39,136
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Do poor children really benefit from the child support grant?

by Marisa Coetzee (University of Stellenbosch) on 10/07/2014 reads 38,720
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Poverty may have declined, but women and female-headed households still suffer most

by Michael Rogan (Rhodes University) on 6/05/2014 reads 38,325
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