In the 2012 South African Employment Report, economist Mike Schüssler pointed out that many unskilled and semi-skilled potential employees struggled to find jobs as the price of certain labour has become unaffordable.
“Unskilled wage rates have rocketed about twice as quickly as in the rich world, after inflation, while management and specialised skills are often underpaid,” he said, adding that, compared with other countries, those with skills were often underpaid in relative terms.
The unskilled labour was being overpaid on average over 100% and the semi-skilled labour forces were earning close to 60% more than they should, he pointed out.
The South African formal sector provided salaries that were, by many standards, in the top 20% of countries around the world. The average gross wage earned in the country compared closely with that of Portugal and New Zealand. He also pointed to the country's starting wages being close to those of developed 'rich' countries, reaching about 4% below Organisation for Economic Cooperation and Development salaries in 2009.
South Africa could not afford to overpay unskilled and semi-skilled employees, particularly as about 60% of the unemployed held low-quality or no skills. In April, an International Monetary Fund working paper found that rapid growth of real wages in South Africa, which outpaced labour productivity growth in most sectors, was suppressing employment creation. Real wages continued to increase rapidly, despite overall soft labour market conditions and economic recovery.
During 2009 and 2010, the report noted that South Africa experienced job losses equating to 5% of the employed in 2008, pushing the country’s unemployment rate to 25%.
Schüssler added that South Africa was the only country in the world that held an unemployment rate above 20% over the last 15 years.
Also, while overall nonagriculture private sector formal employment was higher than a year ago, it was still over 1.4-million employees fewer than in 1980.
Further, employment in the public sector, which was said to pay higher wages than the private sector, had increased from 11% of total formal employment in 1970, to over 22.8% in 2012. In 2011, Schüssler said, the average government salary was 34% higher than the private sector, accounting for more than 12.8% of gross domestic product (GDP) and, together with the salaries paid by State-owned enterprises, reaching over 14.3% of GDP.
Further, employment in the public sector, which was said to pay higher wages than the private sector, had increased from 11% of total formal employment in 1970, to over 22.8% in 2012. In 2011, Schüssler said, the average government salary was 34% higher than the private sector, accounting for more than 12.8% of gross domestic product (GDP) and, together with the salaries paid by State-owned enterprises, reaching over 14.3% of GDP.
The report also pointed out that both the State and State-owned enterprises employed few unskilled people, despite the fact that most of the unemployed in South Africa are unskilled. Unskilled labour made up about 3.8% of the government workforce, while semi-skilled and skilled accounted for 32.6% and 63.5% respectively.
In its totality, the formal employment sector comprised 31% unskilled labour, 32.2% semi-skilled employees and just over 36% skilled workers.
