Tackling Inequalities in Brazil, China, India and South Africa

The Role of Labour Market and Social Policies

image of Tackling Inequalities in Brazil, China, India and South Africa

Greater integration into the world economy and important policy reforms have resulted in Brazil, China, India and South Africa becoming major actors in the globalisation process, with impressive results in terms of economic growth, social development and poverty reduction. But the benefits of stronger growth have not always been shared equally and income inequality has remained at very high levels. 

Existing evidence suggests that the evolution of the distribution of income in these four countries is the result of many forces. These include demographic change, migration, unequal access to education, informal employment, existing regulations and their enforcement, social norms and cultural legacy. These forces are often interlinked and reinforce one another. However, as employment is the primary source of income for most households, understanding the impact of labour market outcomes is crucial.  

This book focuses on the role of growth and employment/unemployment developments in explaining recent income inequality trends in Brazil, China, India and South Africa, and discusses the roles played by labour market and social policies in both shaping and addressing these inequalities. It includes the papers presented at the joint OECD and European Union High-Level Conference on Inequalities in Emerging Economies held in Paris in May 2010. This work is part of OECD’s ongoing dialogue and co-operation with non-member economies around the world.



Better employment to reduce inequality further in South Africa

This chapter explores two angles on labour markets and inequality in South Africa. Have changes in the labour market helped or hindered inequality and poverty alleviation, and have government social policies ameliorated or worsened this situation? Increasing labour participation in the 1990s combined with sluggish growth in labour demand and skill-biased technical change resulted in rising unemployment with new entrants, in particular, African women and the youth, making up the bulk of the unemployed. This rise in zero earners as well as increasing earnings inequality are shown to be the main drivers of South Africa’s rising inequality. While there is little evidence that labour market institutions are particularly inflexible, they have not protected workers or facilitated dynamic adjustments. Access to education has increased remarkably with a large commitment of public resources. However, the quality of this education remains highly heterogeneous. Given South Africa’s skills situation, this has made it hard for new participants to find employment. There is a need for further education reform that focuses on quality rather than access. Despite this bleak picture of the labour market, poverty has decreased, mainly due to an extensive expansion of social grants and increased provision of basic services.


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