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South Africa
  • Capital: Pretoria

  • Area: 1,219,912 km2

  • Population: 43,42 million

  • GDP per capita: US$ 6,900

  • Languages: Afrikaans, English, Ndebele, Pedi, Sotho, Swazi, Tsonga, Tswana, Venda, Xhosa, Zulu

  • Click for map of South Africa

South Africa

Economic and Socio-political Environment

The population of South Africa was estimated to be 42,130,500 in 1998. According to Statistics South Africa, official unemployment fell from 26.7% in February 2000 to 26.4% in February 2001. It is estimated that about 400,000 new job seekers enter the labour market each year; while only between 100,000 and 150,000 new jobs are being created annually.

An important characteristic of the labour market is the unequal distribution of earnings and recent government approved surveys indicate that though income has been redistributed between races since 1991, large income inequalities persist in the country, while inequality within racial groups is worsening. However, real incomes of low-skilled workers of all races have declined probably due to a decline in employment opportunities and the erosion of the value of the Rand. Persistent income inequality may be due to the characteristic shortage of skilled labour and the consequent high international prices pegged to skilled labour. On the other hand, due to inflow of unskilled labour from neighbouring countries, there is an unlimited supply of unskilled labour which depresses their wages, and widening the earnings gap as a result. It must be noted however that since 1994 real wages and productivity have increased by over 20%, bringing rising high living standards to millions of people and improving the competitiveness of the economy.

Real annual growth in GDP fell from 3.3% in the 1970s to 0.2% in 1994. With the changes in the political scenario, the trend was revised such that the average real annual growth between 1994 and 2000 was 2.4%. In 2000 the economy grew by 3.4% before declining to 2.2% in 2001. According to the 2002/2003 National Budget the economy is expected to grow by 2.3% in 2002 before expanding by a robust 3.3% in 2003.

Budget deficit is expected to be 2.1% of GDP in 2002/2003 and is expected to fall to 1.7% in 2004/2005. During the last quarter of 2001 the Rand significantly depreciated such that by the end of 2001 it was trading at R12.13:US$1. The currency recovered in the first quarter of 2002 to R9.70:US$1 on May 20th before subsequently falling to R10:US$1 on July 17th 2002. It is however expected that for the remainder of 2002 factors that helped to strengthen the Rand in the first half of the year should continue to support it. In 2000 the average inflation rate was 7.7%. In 2001 it fell to 6.6% before slightly increasing to 6.9% in 2002.

Due to the transformation of the late 1990s, the economy has become more open to trade and capital flows, with impressive growth in both imports and exports. Besides being a beneficiary of the USís Generalised System of Preferences, which grant duty free treatment for more than 4 650 products, South Africa is also a beneficiary of the Africa Growth and Opportunity Act, which permits duty free entry of clothing and selected textiles into US, subject to certain strictly defined criteria and policy reforms.

The effect of HIV/AIDS on labour force participation is difficult to predict due to the paucity of data. Extrapolated data indicate that about 12% of the adult population is HIV infected; with a daily increase of 1,700 infected persons. The economic and social impact of this have not been fully ascertained. What is certain is that HIV/AIDS is more prevalent among the economically active population. One study predicts an HIV prevalence of 12% among highly skilled workers, 20% among skilled workers and 27.2% among low skilled workers in 2003. Declining life expectancy and job losses will also affect the dependency ratio; an increased burden on the working population.

From recent media reports, this is the tip of the iceberg as new studies reveal that the numbers of those infected could be a lot higher than projected and reported. This will also have implications for the number of child-headed households, with its attendant effect on the problem of working children in South Africa.

It is recognized that the main socio-economic concerns in South Africa that should be addressed are the high income inequality, high rates of unemployment (which contributes to the level of poverty) and the emerging HIV/AIDS pandemic. One of the most significant events of 1998 was the Presidential Jobs Summit, which provided a forum for government, business, workers and the community to find solutions to the unemployment challenges facing the country. This was the culmination of an intensive process of discussions with social partners, which emerged with a national vision and implementation strategy that is reflected in the Declaration of the Summit. The inclusion of South Africa in the JFA programme was expected to provide the comprehensive framework for the implementation of the Summit Agreements. Unfortunately, this has been hindered by the on-going review of the programme.

In furtherance of the Job Summit objectives, the main trade union federation, COSATU embarked on a programme of action (under S.77 of the Labour Relations Act), including regional and national strikes, to make job creation and retention priority national development concerns.

The political front has remained quite stable after the election of Mr. Thabo Mbeki as the second democratic President of South Africa. The major concerns of the government, as identified through the UN Common Country Assessment (CCA), include economic growth for employment creation (clearly articulated in the Department of Labour's 15 Point programme); building social cohesion through effective social dialogue; improved delivery of basic social services; managing the challenges of HIV/AIDS; addressing environmental concerns and enhancing Southern African regional integration. Though several issues have come to the fore in respect of the national AIDS debate, the issues related to the linkage between HIV and AIDS as well as the high cost of AIDS cocktails are quite dominant.

Social Dialogue

The National Economic Development and Labour Council (NEDLAC) remains the main institution for the furtherance of social dialogue in this young democracy. Membership of NEDLAC is drawn from the government, employers, trade unions and the community. In addition to negotiations and consultations, NEDLAC is engaged in a range of activities which strengthen social dialogue by ensuring that the social partners and other relevant stakeholders are not excluded from the policy making process. It should, however, be noted that there are deliberations on how to make NEDLAC even more responsive to the needs of the constituent partners.

The Commission for Conciliation, Mediation and Arbitration (CCMA) and the Labour Court, within the framework of the implementation of the Labour Relations Act (1995), are fully operational. In fact, a landmark decision concerning the protection of persons living with HIV/AIDS from employment discrimination was pronounced in the Johannesburg Labour Court in May 2000. The Basic Conditions of Employment Act, 1997 and the Employment Equity Act, 1998 are very useful legislations for fostering social dialogue. Because of the perceived usefulness of the South African experience of social dialogue, the ILO/Swiss project has been extended to the other countries in the sub-region.

International Labour Standards

As of 30th April 2000, South Africa had ratified all the core conventions of the ILO; including C. 182. However, the Report of the ILO Declaration Expert-Advisers indicated that South Africa was one of the countries that did not provide complete annual reports under the follow-up to the Declaration. This capacity gap is expected to be addressed in future ILS workshops.

Conventions ratified by South Africa

ILO Technical Cooperation

South Africa is supposed to be one of the six additional countries implementing the JFA programme. Some of the TC projects recently implemented or being implemented include:

         Support to the DOL on the Survey of Activities of Young People in South Africa as a first step to developing a comprehensive national programme on child labour;

         Support to the DOL and the Unemployment Insurance Fund (UIF) on the finalisation of the Unemployment Insurance Bill;

         Survey on new trends in workforce training and development- Focus on competence;

         Capacity building based on technical cooperation programmes for the Federated of Unions of South Africa (FEDUSA) and South African Agricultural Plantation and Allied Workers Union (SAAPAWU);

         Skills Development in Project Management for the Department of Labour;

         Targeted support for the 'Efficient Application of Labour - Based Construction Methods in the Construction Sector';

         Baseline Research on Women's SMME issues and Employment Opportunities in Durban;

         Micro-Save Programme for Rural Women and other Disadvantaged Groups;

         Technical support for developing guidelines on the Code of Good Practice: HIV/AIDS in the Workplace; and

         Technical support to 'Develop and Set Minimum Standards of Work and Wages in Particular Sectors: Investigation into the Progressive Reduction of Working Hours to a Level of 40 Hours Per Week.'

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Updated by PR/MK/TG Approved by FLE. Last update: 20 August 2002