Browsing by Author "Flowerday, Wayde Thomas"

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    Employment policy effects on firm dynamics : evidence from the South African labour market
    (Stellenbosch : Stellenbosch University, 2020-03) Flowerday, Wayde Thomas; Rankin, Neil; Stellenbosch University. Faculty of Economic and Management Sciences. Dept. of Economics.
    ENGLISH ABSTRACT: As South African policymakers strive to tackle low economic growth, poverty, unemployment, and inequality, the ability to unpack the effects of policy at a firm-level is key to the reformulation of more effective policy. The effects of Acts and policies within the South African labour market have not been well studied, especially when considering them from the firm-level. This thesis adds to the sparse literature by providing insights into how particular government labour market policies have affected firm dynamics. Firstly, this thesis is the first to conduct an impact study of the Employment Equity Act of 1998 on employment and production strategies of South African firms. The Act is a threshold policy, demanding that firms with 50 or more employees comply with it. Analysis revealed that there is a high possibility that the introduction of the Act has created a distortion in employment which has resulted in an inefficient allocation of resources at a firm level. This results in a lower employment of labour, particularly at the small, medium enterprise level, showing a potential unintended consequence of the Act. Secondly, this thesis utilises a new-to-the-world dataset, which was constructed purely to facilitate the research conducted within this thesis –the Bargaining Council Minimum Wage Dataset (BCMWD). This dataset is then utilised to generate descriptive results, not only showcasing its usefulness as a dataset, but also illustrating the evolution of minimum wages over time, as well as providing up to date estimates of Bargaining Council coverage. Thirdly, by using the BCMWD this thesis unpacks the effects of the existence of Bargaining Councils and their minimum wage agreements on firm dynamics – particularly on wages, and employment. The results reveal that despite the minimum wages prescribed by said Bargaining Councils, the average employee still reports a wage that is 42% below the stipulated minimum. Furthermore, the extension of updated Bargaining Council agreements is shown to have a detrimental effect on employment, whereby it decreases by approximately 8%. Yet again, this marks the intended effect of this area of policy as counterproductive. Lastly, this thesis unpacks the evolution of labour productivity in post-apartheid South Africa, especially in relation to Bargaining Councils. The thesis concludes that aggregate labour productivity (in manufacturing) in South Africa has been growing and that almost all of this growth has been driven by within-industry growth, with little being driven by cross-industry reallocation. Furthermore, this thesis suggests that the negative relationship exhibited by initial labour productivity and labour productivity growth speaks to a “catching-up” behaviour by lower labour productivity sub-sectors. And an analysis of Bargaining Council effects suggests that the presence of Bargaining Councils is correlated with sub-sectors being more productive. This result reinforces the notion that Bargaining Council agreements force less productive firms to restructure to become more productive, likely favouring more skilled employees over their less skilled counterparts.