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OECD Economic Surveys: South Africa 2008

image of OECD Economic Surveys: South Africa 2008
OECD's first review of South Africa's economy. After a general overview of recent economic developments and programmes, this survey examines key challenges including reforming goods and services markets and realising South Africa's employment potential. This publication includes StatLinks, URLs linking to Excel® spreadsheet versions of tables and graphs.

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Realising South Africa's employment potential

Unemployment in South Africa is extremely high and very unevenly distributed, being concentrated among young less-skilled blacks. The sharp increase in unemployment in the 1990s was driven by a surge in the supply of less-skilled labour, accompanied by a failure of labour demand to keep pace. Growth of the working-age population and the release of pent-up pressures for labour force participation in the majority black population explain the big increase in the supply of less-skilled labour, while negative demand shocks in labour-intensive sectors were an important factor in the slow growth of demand. The combination of these factors means that market-clearing would have required a substantial fall in real wages in the decade after 1994, especially for less-skilled workers. Although some decline in real wages does appear to have taken place, this was insufficient to prevent the jump in unemployment – union power and other features of the labour market prevented a much larger downward move in real wages.

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