South Africa's economic policies on unemployment: A historical analysis of two decades of transition
Upon South Africa’s transition to democracy in 1994, there were great hopes for an economic revival in the country, underpinned by supportive economic policies that prioritised job creation and the elimination of longstanding poverty and inequality. Until now, the efficacy of economic policy in brin...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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AOSIS
2016-12-01
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| Series: | Journal of Economic and Financial Sciences |
| Subjects: | |
| Online Access: | https://jefjournal.org.za/index.php/jef/article/view/72 |
| _version_ | 1818366133761212416 |
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| author | Lorainne Ferreira Riaan Rossouw |
| author_facet | Lorainne Ferreira Riaan Rossouw |
| author_sort | Lorainne Ferreira |
| collection | DOAJ |
| description | Upon South Africa’s transition to democracy in 1994, there were great hopes for an economic revival in the country, underpinned by supportive economic policies that prioritised job creation and the elimination of longstanding poverty and inequality. Until now, the efficacy of economic policy in bringing about these much-coveted outcomes – particularly improvements on the employment front – has received little attention. This paper ventures into relatively uncharted territory by analysing how political dynamics and accompanying economic policy frameworks have impacted the structure and momentum of employment growth in South Africa over the past two decades. This is achieved by examining the changes in employment and, more specifically, the changes in the cost-neutral change in the capital-to-labour (K/L) ratio from 1995 to 2013. For the purpose of the analysis, a dynamic CGE model of the South African economy is used, with the focus being primarily on changes in the capital and labour markets during the period in question across a range of sectors. Among the results are that there was an increase in capital relative to labour (K/L) during the period, despite there being an increase in the rental price of capital relative to wages (PK/PL). The results suggest that at any given ratio of real wages relative to the rental price of capital, industries would choose a K/L ratio 8.1% higher in 2013 than in 1995. The study offers new insights into what is hampering employment in South Africa, which has been eroding the economy’s productive base and prompting serious questions about the country’s growth prospects. Clearly, South Africa needs a well-informed and responsive economic policy framework if it is to escape the potentially explosive unemployment crisis in which it has long been mired. |
| first_indexed | 2024-12-13T22:31:19Z |
| format | Article |
| id | doaj.art-9bddb0a3b5e242f5a9726eef3d54ad26 |
| institution | Directory Open Access Journal |
| issn | 1995-7076 2312-2803 |
| language | English |
| last_indexed | 2024-12-13T22:31:19Z |
| publishDate | 2016-12-01 |
| publisher | AOSIS |
| record_format | Article |
| series | Journal of Economic and Financial Sciences |
| spelling | doaj.art-9bddb0a3b5e242f5a9726eef3d54ad262022-12-21T23:29:05ZengAOSISJournal of Economic and Financial Sciences1995-70762312-28032016-12-019380783210.4102/jef.v9i3.7270South Africa's economic policies on unemployment: A historical analysis of two decades of transitionLorainne Ferreira0Riaan Rossouw1North-West UniversityNorth-West UniversityUpon South Africa’s transition to democracy in 1994, there were great hopes for an economic revival in the country, underpinned by supportive economic policies that prioritised job creation and the elimination of longstanding poverty and inequality. Until now, the efficacy of economic policy in bringing about these much-coveted outcomes – particularly improvements on the employment front – has received little attention. This paper ventures into relatively uncharted territory by analysing how political dynamics and accompanying economic policy frameworks have impacted the structure and momentum of employment growth in South Africa over the past two decades. This is achieved by examining the changes in employment and, more specifically, the changes in the cost-neutral change in the capital-to-labour (K/L) ratio from 1995 to 2013. For the purpose of the analysis, a dynamic CGE model of the South African economy is used, with the focus being primarily on changes in the capital and labour markets during the period in question across a range of sectors. Among the results are that there was an increase in capital relative to labour (K/L) during the period, despite there being an increase in the rental price of capital relative to wages (PK/PL). The results suggest that at any given ratio of real wages relative to the rental price of capital, industries would choose a K/L ratio 8.1% higher in 2013 than in 1995. The study offers new insights into what is hampering employment in South Africa, which has been eroding the economy’s productive base and prompting serious questions about the country’s growth prospects. Clearly, South Africa needs a well-informed and responsive economic policy framework if it is to escape the potentially explosive unemployment crisis in which it has long been mired.https://jefjournal.org.za/index.php/jef/article/view/72Economic policySouth AfricaunemploymentCGE modellingcapital-to-labour ratio |
| spellingShingle | Lorainne Ferreira Riaan Rossouw South Africa's economic policies on unemployment: A historical analysis of two decades of transition Journal of Economic and Financial Sciences Economic policy South Africa unemployment CGE modelling capital-to-labour ratio |
| title | South Africa's economic policies on unemployment: A historical analysis of two decades of transition |
| title_full | South Africa's economic policies on unemployment: A historical analysis of two decades of transition |
| title_fullStr | South Africa's economic policies on unemployment: A historical analysis of two decades of transition |
| title_full_unstemmed | South Africa's economic policies on unemployment: A historical analysis of two decades of transition |
| title_short | South Africa's economic policies on unemployment: A historical analysis of two decades of transition |
| title_sort | south africa s economic policies on unemployment a historical analysis of two decades of transition |
| topic | Economic policy South Africa unemployment CGE modelling capital-to-labour ratio |
| url | https://jefjournal.org.za/index.php/jef/article/view/72 |
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