A Review of labour Markets in South Africa: Wage Trends and Dynamics in South Africa

by ALTMAN, M., 2005
Research Report, Employment Growth & Development Initiative, Human Sciences Research Council

Wages play an important role in the broader economy from both efficiency and equity perspectives. Wage formation also lies at the heart of a power play between workers and employers. As part of a broader labour market review, Altman considers the state of knowledge on wage determination in South Africa. She assesses whether wage setting is appropriate for the country’s development needs; whether wages are set within a competitive framework; and the role of institutions such as unions, bargaining councils and minimum wages. Some flexibility to market conditions is often sought. While this commonly refers to contract flexibility (or inflexibility), it could also refer to entrenched non-competing labour market segments. Patterns of wage determination may be segmented by occupation, industry, geographical area, gender or race. These can be important sources of inflexibility and have serious cost and efficiency implications. This paper reviews general wage trends and the distribution of wages, and then considers explanations for wage trends attributed to economic structure. It reviews the impact of unions and minimum wages on overall wages and equity, and assesses the evidence of racial and gender discrimination. The paper then investigates the effect of workers’ spatial mobility on local labour markets and therefore on wage levels.