Real Wage, Labor Productivity, and Employment Trends in South Africa : A Closer Look

Author/Editor:

Nir Klein

Publication Date:

April 1, 2012

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

The paper looks at the dynamics of employment in South Africa and examines the factors that contributed to the job-shedding observed during the recent financial crisis. The paper finds that the rapid growth of the real wage, which outpaced the labor productivity growth in most sectors, played an important role in suppressing employment creation. The paper also finds that while there is a co-integrating link between the real wage and labor productivity, the deviations from equilibrium are persistent and thus contribute to a weak link between real wage growth and labor productivity growth in the short term. This finding is also supported by a cross-country analysis, which shows that in South Africa the link between the real wage and labor productivity is substantially weaker than in other emerging markets, even after controlling for labor market tightness indicators.

Series:

Working Paper No. 12/92

Subject:

English

Publication Date:

April 1, 2012

ISBN/ISSN:

9781475502824/1018-5941

Stock No:

WPIEA2012092

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

28

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