South Africa sub-project

The key aim of the first set of papers in the first R4D project period (2014 – 2017) will be to establish changes in the regulatory and competitive environment in which South African firms have to decide on their production, employment and sales strategies. In particular, the first three papers will show how the regulatory environment changed and how these changes are related to labour market outcomes, firm characteristics and firms’ decision to engage with the global economy. The second set of papers (due in the second round of the R4D project from 2017 to 2020) will explore firms’ responses to global competition and greater labour market regulation by investigating, for instance, the increased casualization of labour through outsourced production into the informal economy, arm length labour relations via labour brokering and changing sales strategies into less competitive markets like the regional market and how these strategies have affected the quantity and quality of employment.

Paper 1 (2015)
The aim of the country report is to provide an overview of the economic developments and trends in South Africa since the first democratic elections with a focus on the changing structure of production and employment in the South African economy. Against the backdrop of the various policy frameworks implemented by the South African government to affect the quantity and quality of employment, this paper analyses sectoral shifts in production and employment, changes in firm characteristics and overall trends in labour market outcomes.

Paper 2 (2015)
The aim of this paper is to provide an overview on technological upgrading within South Africa. This paper will pay particular attention to policies that have been implemented to target technological progress and knowledge transfer; research and development subsidies; foreign direct investment subsidies; policies targeting private sector investment; and policies related to educational and vocational training.

Paper 3 (2016)
This paper explores the shifts in labour market regulation and legislation in South Africa from 1994 onwards, and investigates the impact of one particular labour market policy – the Employment Equity Act of 1996 – on employment and production strategies of South African firms. Using the fact that the Employment Equity Act is a size dependent regulation which applies to firms of 50 employees and more, the paper proposes a Regression Discontinuity Design (RDD) approach to investigate the impact of the Employment Equity Act on firm dynamics for firms that fall just around the policy threshold.

Paper 4 (2017)
The third paper is the most data intensive paper in the three year period and requires that we build a database of Bargaining Councils and their decisions through extracting information from government gazettes. Wages and working conditions agreed upon by Bargaining Councils vary by coverage of the council, by region and by job description. The paper will exploit three aspects of variation to identify the effect of Bargaining Councils on employment and wages: 1), regional variation in coverage; 2), time variation; and 3), variation in wage levels for different occupations within a Bargaining Council. The variations can then be used to examine whether these Bargaining Council agreements are associated with wage outcomes, employment levels and employment by different firm sizes.