Inequality among the informally wage-employed in South Africa – implications for the impact of exogenous shocks on lives and livelihoods

Abstract

South Africa's business cycle saw the end of a 99-month upswing in  November 2007. Average real GDP growth was three per cent between 1995 and 2005. However, the formal labour market was unable to absorb the increasing labour supply. Thousands of unemployed men resorted to informal wage employment as day labourers. Day labourers are particularly vulnerable to exogenous shocks such as the COVID 19 pandemic. We critically reflected on and analysed the spatial inequalities in the socioeconomic circumstances of day labourers at provincial level and contemplated the impact of exogenous shocks on their lives and livelihoods. We used the only nationally representative database on day labour activities in South Africa as well as the latest available micro-studies. Whilst the empirical findings indicated that gardening, loading and unloading, bricklaying assistance, construction and painting were the most common activities of these day labourers, focusing on provincial differences and inequalities, we found that day labourers in the Western Cape and Gauteng on average enjoyed shorter work hours, shorter tenure as day labourers, but higher wages than those in South Africa's economic weaker provinces. Since 2007, economic shocks and a new wave of migration have led to increased unemployment as well as declining real and reservation wages among day labourers across all provinces in South Africa. The COVID 19 pandemic's long-term implications are not yet clear but there may be a worsening of the livelihood and provincial inequalities of the day labourers. However, the short term implications for day labourers in the whole of South Africa are nothing short of disastrous. As a result of declining demand for their labour because of COVID 19, day labourers face economic hardships and even starvation. Government's relief efforts may not be sufficient in terms of their depth and reach. New  countrywide research is urgently required to provide coordinated policy responses to the plight of the informally wageemployed in South Africa.