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The gender-wage gap in South Africa (blog 2 of 2)

In a previous blog, we discussed unconditional wage gaps in South Africa. As a refresher, an unconditional wage gap is simply the difference in average or median wages between demographic groups (say, for example, the gap between females and males), not controlling for factors that influence wages, like experience or education. As a reminder, unconditional estimates suggest that men earned approximately 36% more than females according to the 2019 Labour Market Dynamics Survey (LMDS).

Did inequality contribute to the recent political unrest in KZN?

Several factors were behind the recent violence and looting in KwaZulu-Natal. This blog investigates whether inequality, after accounting for other factors, was a likely contributor to the unrest. Overall, we find a positive relationship between inequality and the prevalence of unrest at the municipal level.

Demographic gaps in South Africa over time

Gender and racial inequality permeate the South African social landscape, even 25+ years after our democratization. This bias towards females and people of colour has inextricably created labour market tensions. Females and people of colour often earn substantially lower salaries for the same level of work. Even though affirmative action policies have been implemented across the country to some effect, not enough has been done to close the gap between earnings for people of colour and white individuals and separately for females and males. In this multi-part blog series, I look to discuss the gender and race salary differentials in the country, paying particular attention to the difference between conditional and unconditional wages.

Using yearly data for responsible forecasting the impact of COVID-19 on real GDP and employment in South Africa [part 1 of 2]

Modelling macroeconomic trends across many African countries is extremely challenging, given the lack of up-to-date data available for public use. This modelling challenge is exacerbated by the uncertainty surrounding the magnitude of the economic impact of COVID-19. Instead of not modelling with this limited data, I believe that there is room to model innovatively and responsibly by creating a hybrid forecasting model that relies on a mixture of yearly data and literature. This model suggests that, in the worst-case, South African real GDP will decline by as much as 8% in 2020, and roughly 1.2 million jobs will be shed. These estimates from this model fare well in comparison to more sophisticated forecast models, making them integral tools for development economists wanting to understand the trajectory of other African economies with limited data availability.

Monetary policy and COVID-19: what to expect from the SARB

In light of Covid-19, this blog attempts to unpack the potential policy position of the SARB as we build up to the MPC meeting on the 19th of March. Given its detrimental impact on global growth, coupled with South Africa’s growth decline over the last 2 quarters, I believe that the likelihood of the MPC decreasing the repo rate by 25 basis points is high. However, evidence also points to a potentially unchanged repo rate, if it believes that a repo-rate decrease could bring about unintended consequences relating to capital flight and/or exchange rate depreciation

Unbundling Eskom – a silver or lead bullet?

The recent plan by the government of South Africa to unbundle the state electricity provider into three arms – Generation, Transmission and Distribution – has raised various questions. One of the more important question pertains to how the R400 billion debt will influence the unbundling. This article draws on international experiences as a way of preempting which outcomes (both negative and positive) the unbundling will result in, taking into account Eskom’s performance over time. While our analysis is not definitive, it does infer that in order to minimise the negative externalities, and maximise the positive gains from unbundling, there is need for government to have a well-considered action plan that balances the interests of the private and public sector.

Profit-led or wage-led growth; How income distribution influences the macroeconomy

“Income distribution dynamics and the macroeconomy have a very intimate link. This link is evident in many key macroeconomic indicators, especially when looking at how national production changes with changes in income distribution. As such, this blog tries to unpack the relationship between output and income distribution (measured by the labourer’s share of national income), and discusses its relevance to South Africa.”