Karl Marx once famously wrote[1]:

Wages are determined by the bitter struggle between capitalist and worker

While there is truth to this statement, the statement is also somewhat reductionist, especially in the South African context.

Given our country’s history and lived experience across the world, I’d like to amend Marx’s 1844 statement as follows:

Wages are determined by the bitter struggle between capitalist and worker. However, some struggles are more bitter than others.

By this, I mean that the average wage across genders and racial groups differs quite substantially. In most analyses conducted[2], a wage premium exists for individuals who are either male or white in the country, while females and people of colour tend to earn lower wages relatively[3].

When looking at the average wage of individuals across the country, there are two ways to analyse such a phenomenon:

1. Unconditional estimates: By comparing average wages across the economy for each demographic profile, one can develop a measure of wage differentials across those demographic groups.

2. Conditional estimates: Comparing wages across demographic groups by considering individual-specific factors that influence wage levels (education level, experience, occupation, and so on).

While unconditional estimates provide a very high-level and somewhat informative picture of wage gaps across demographic groups, these estimates do not control individual-specific characteristics, making such estimates extremely naïve.

However naïve these estimates may be, this first blog of the series aims to provide a time series representation of average wages across South Africa’s demographic groups. From there, a different blog (or two) will attempt to provide conditional estimates of the impact that being in a particular demographic group has on an average South African’s wages.

These unconditional measures are summarised below, using data from the South African Labour Market Dynamics Survey (LMDS):

Figure 1: Average unconditional wages4 for white South Africans have been between 2 and 8 times higher than average unconditional wages for people of colour.

In terms of gender, the picture is still stark as well:

Figure 2: Although unconditional average wages converged for males and females in 2017, they have since diverged, showing signs of a widening gender wage gap

While these naïve metrics should be treated as such (i.e., naïve), such major unconditional wage differentials are alarming and require further dissection. After further dissection in a future blog, an analysis of the efficacy of affirmative action might shed some light on whether the progress we have made as a fledgeling democracy is sufficient or not.

Based on my gut feeling, the answer is probably not. But like Marx, the aim should always be to unearth the truth, no matter how ugly it looks, and then take steps to course-correct.

Bibliography

Fisher, B., Biyase, M., Kirsten, F. & Rooderick, S., 2020.Gender Wage Discriminitation in South Africa within the Affirmative Action Framework,Johannesburg: Economic Development and Well-Being Research Group.

National Minimum Wage Research Initiative, 2016.National Minimum Wage.[Online] Available at:http://nationalminimumwage.co.za/
[Accessed 31 March 2021].