Labour Policy in South Africa: From 1994 to now

What are the key developments in the South African labour market since the end of apartheid? We use data spanning from 1993 to 2019 and estimate trends in employment, earnings, and educational attainment. We do this for the overall population and then compare how things have changed for groups defined by race and gender. We then perform Oaxaca-Blinder decompositions to better understand the racial and gender gaps in employment and earnings. Finally, we summarise the key legal changes and policies that are likely to have shaped the labour market and reflect on their likely roles in the temporal changes that we observe. Our empirical results show that there was a sustained improvement in employment and earnings outcomes in the early 2000s and that this was experienced broadly across all segments of the workforce. This pattern changed following the global financial crisis. When analysing the gaps in outcomes between men and women, there has been clear progress in the reduction of both employment and earnings gaps over time, although substantial gaps remain. In contrast, there has never been a meaningful reduction in the racial employment and earnings gaps. This is true despite substantial increases in educational attainment among African and Coloured people. Our results suggest that this lack of convergence could be explained by two other developments. First, White people also increased their education levels, although in this group, the increases are mostly at the tertiary education level. Second, the rates of return to tertiary qualifications are very high and have increased over time. These two factors combine in the labour market and result in the depressingly large and stable racial employment and earnings gaps.