Wage Trends in Post-Apartheid South Africa: Constructing an Earnings Series from Household Survey Data

Abstract

This paper examines South African wage earnings trends using all the available post-1994 household survey datasets. This allows us to identify and address the sources of data inconsistencies across surveys in order to construct a more comparable earnings time series. Taking account of the inconsistencies in questionnaire design and the presence of outliers, we fi nd that it is possible to construct a fairly stable earnings series for formal sector employees.We fi nd that claims that workers have on average experienced a substantial decrease in their real wage earnings in the post-apartheid era is based on choosing datasets on either side of Statistics South Africa's changeover from October Household Surveys (OHS) to the more consistent Labour Force Surveys (LFS), which caused a discontinuous and inexplicably large drop in average earnings. The data actually show an increase in real wage earnings in the post-transition period for formal sector employees, and does not provide strong evidence of decreasing wages in the informal economy. The paper also investigates changes in the distribution of earnings, as well as mean earnings trends by population group, gender and skill category.

The challenge of low employment economic growth in South Africa: 1994 -2008

“…Labour displacement relative to the country's GDP appears to have been at -1. Output expansion with a less than proportionate increase in the labour force (in Table 2 (Burger and Yu, 2006). This reinforces the point that the employment elasticity of economic growth is rather low in South Africa; also notice in Table 2 above, that more recently the ability of the economy to absorb labour is waning, as the growth in output has not really resulted in a matching growth in employment.…”

The Gender Wage Gap in the Post-Apartheid South African Labour Market

“…Burger and Yu (2006) for instance, in an analysis of wage trends in post-apartheid South Africa, acknowledge that "it is widely accepted that that the OHS and LFS datasets cannot easily be compared, [but] these difficulties are often overlooked in the service of constructing a longer time series" (Burger and Yu, 2006: 2). 5 We note that we have opted to use the 2001 LFS rather than the 2000 LFS in light of the fact that the 2000 data seems to be an outlier in the series: Burger and Yu (2006) found that average earnings were dramatically higher in the September 2000 LFS than in the surveys directly preceding and following it (Burger and Yu, 2006).…”

Realising South Africa's Employment Potential

“…And the 2000 discontinuity problem is again marked for wages, which are shown as dropping 38% in real terms between October 1999 to February 2000, then more than doubling between February and September 2000, before falling back almost to the same level in the following March. The September 2000 seem to have been affected by a problem of outliers which probably reflects misrecording (Burger and Yu, 2007), but overall, the picture that emerges from the OHS-LFS interface is that the latter captured a large number of low-paid, especially informal sector, workers (as well as unemployed individuals) not included in the former.…”

“…A good deal of evidence (e.g. Banerjee et al;2006;Burger and Yu, 2007;Woolard and Woolard, 2006) indicates that real wages have been stagnant or falling on average over most of the postapartheid period.…”

“…Burger and Yu (2007) estimate that overall real earnings in the formal sector declined until about 2000, were little changed until 2002, and began to rise thereafter, being slightly higher in 2005 than in 1995.…”