WP 99/027 - Correlates of Vulnerability in the South African Labour Market

Haroon Bhorat, Murray Leibbrandt

Date of Publication: 
May 1999

Using the October Household Survey of 1995 (OHS95), this paper seeks to understand the determinants of indigence in the South African labour market. To this end the study presents a description of the labour market, focusing on how covariates such as race, gender, education and location help explain the poverty observed in the labour market. A key innovation of the paper is the application of traditionally household poverty measures to individuals in the labour market. Hence through utilising cumulative distribution functions drawn from the Foster, Greer, Thorbecke (FGT) class of poverty measures, we are able to understand the distribution of earnings within a stochastic dominance framework. Such distribution functions are then derived for a series of labour market categories ranging from employment by race to employment by sector and occupation.In addition, by setting two individual poverty lines, specific measures of poverty are also determined according to the different labour market cohorts. Some of the key results of the study are that farm workers and household domestic workers constitute the most vulnerable individuals amongst the employed. In addition, apart from race, gender and education are crucial determinants of low or zero earnings. Rural labour markets also surface as a key component of poverty in the labour force. Finally, there is sufficient evidence to suggest that a different labour market seems to be operating for Africans and Coloureds on the one hand, and Asians and Whites on the other.

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