Contemporara Labour Market

DPRU
WORKING PAPERS

Contemporary Labour Market Policy and Poverty in South Africa

Muzi Maziya

No 99/34 ISBN: 0-7992-1979-7

December 1999

Development Policy Research Unit University of Cape Town

Abstract

This paper outlines the recent labour market reforms in South Africa and discusses their likely impact on poverty and the working poor. Using an innovative framework developed elsewhere in the literature, the paper shows how labour market processes and outcomes can affect the level of household poverty in a country. The impact of post-apartheid labour market reforms on poverty is then assessed on the basis of their likely effect on unemployment, skill levels, the bargaining power of the workforce, and the “quality” of jobs. The analysis suggests that the recent labour market reforms are likely to contribute to a reduction in overall household poverty. However, their impact on poverty would be stronger if policies were adopted to assist the most vulnerable workers in the face of likely employment losses.

Acknowledgements

This paper is part of a larger one-year project on Labour Markets, Poverty and Inequality in South Africa. We would like to thank the African Economic Research Consortium (AERC) and the South African Department of Labour for their generous financial assistance.

CONTEMPORARY LABOUR MARKET POLICY AND POVERTY IN SOUTH AFRICA

Introduction
Amongst the major challenges that faced the new African National Congress (ANC) government in 1994 was the extent of poverty and inequality, which were largely a legacy of apartheid and past race-based policies. A household survey conducted in late 1993 to assist the new government by providing an empirical basis for its policies, found that 53% of the population lived in poor households, and among the poor, 95% were African (RDP, 1995). The survey also found that South Africa had one of the worst records in terms of social indicators (health, education, safe water, and fertility)... [continues]

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