Accounting for Changes in Manufacturing Employment in ... for Changes in... · ACCOUNTING FOR CHANGES IN MANUFACTURING EMPLOYMENT IN SOUTH AFRICA 139 1980s. After hitting highs at

INTRODUCTIONThe objective of this study is to understandthe components, as well as the possible causaldeterminants, of the changes in manufacturingemployment in South Africa. Over the past twodecades, the level of employment has hoveredwithin a fairly narrow range of approximately8, 150, 000 to 8, 550, 000, with the 2004 figurenear the mid-point of this range at 8, 388, 697.1

This stagnant level of employment togetherwith rapidly growing labour supply hasbrought the levels of unemployment to crisisproportions. The ‘broad’ unemploymentcurrently stands at 40.5 per cent, while the‘narrow’ rate (excluding discouraged jobseekers) is at 26.5 per cent (Statistics SouthAfrica 2005). While total employment has been

9Accounting for Changes in Manufacturing

Employment in South AfricaFIONA TREGENNA*

stagnant, manufacturing employment hasdeclined significantly. The latter is currentlyat levels last seen in the early 1970s, althoughthere does appear to be some stabilization sincethe year 2000.

This paper focuses on the relationshipsbetween capital stock, capacity utilization,relative factor utilization, and employment.Basic decomposition techniques are used toinvestigate the extent to which changes inemployment between 1970 and 2004 can beaccounted for by these factors. Although thisanalysis does not explain underlying causal re-lationships, it may be helpful in understandingthe various changes that have taken place aswell as shedding light on priorities for furtherresearch. From a policy perspective, identi-fying the critical blockages to employmentgrowth may be helpful in designing focusedkey interventions currently prevailing to reducethe devastating levels of unemployment.

The next section of the paper reviewsrelevant empirical trends in South Africanmanufacturing, notably those pertaining tochanges in output, capital stock, capacityutilization, relative factor utilization, and

*This research was conducted while the author wasworking at Economic and Employment Policy Research(EEPR) at the Human Sciences Research Council(HSRC) in Pretoria, South Africa. I would like to thankMiriam Altman and Rob Davies for their commentsand support.

1All data used throughout this paper are sourcedfrom the South African Standardized Industry Database(SASID) unless otherwise indicated.

138 GLOBALIZATION AND DEVELOPMENT

employment. The third section begins bybriefly discussing some relevant conceptualissues, particularly concerning the relationshipbetween changes in capital stock and employ-ment. Decomposition techniques are thenused to disaggregate changes in employmentinto a capital stock effect, capacity utilizationeffect, and relative factor utilization effect.The results are presented for manufacturingas a whole, as well as by sector. The fourthsection discusses the results and possiblepolicy implications.

EMPIRICAL TRENDSThis section provides an overview and analysisof trends in capital accumulation, capacityutilization, factor utilization, and employmentin South African manufacturing over theperiod 1970–2004. The reason for the focuson these particular variables is that they arethe components of the identity relationship,

posited in the next section, that forms thebasis of the decomposition analysis.

CAPITAL ACCUMULATION, CAPACITY UTILIZATION,FACTOR UTILIZATION, AND EMPLOYMENT

The Figure 9.1 shows the trends in real fixedcapital stock, capacity utilization, labour in-tensity (measured as the ratio of employmentto effective capital), and employment for themanufacturing sector. Capital stock rose byabout 330 per cent from 1971 to 2003. Capacityutilization fluctuated in an apparently cyclicalfashion, varying between about 77 per cent and86 per cent over the three decades, displayingan overall slight downward trend. Of course,given the construction and nature of thecapacity utilization measure, one would notexpect as much variation in this measure aswith the other series shown. Labour intensityfell dramatically and almost continuously, withthe exception of a short period in the mid-late

Figure 9.1: Trends in Fixed Capital Stock, Capacity Utilization, Labour Intensity,and Employment: Manufacturing Sector, 1972–2003

300

175

200

225

250

275

50

75

100

125

150

0

25

Inde

x, 2

000=

100

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

Capital Capacity utilization Labour intensity Employment

ACCOUNTING FOR CHANGES IN MANUFACTURING EMPLOYMENT IN SOUTH AFRICA 139

1980s. After hitting highs at the beginning andat the end of the 1980s, employment in manu-facturing has now fallen back to levels expe-rienced in the early 1970s2 Total employmenthas also fallen from its 1989–90 peak, thoughnot as dramatically as the fall in manufac-turing employment. Given the dramatic risein labour supply, unemployment rates haverisen significantly.

Figure 9.2 shows the changing relationshipbetween gross fixed capital formation andcapacity utilization in manufacturing. It isinteresting to note what appears to be anincreasing divergence between the two seriessince about 1990, and in particular since about1995 when real gross fixed capital formationcontinued to increase despite the low and

declining rates of utilization of existingmanufacturing capacity.

Smith (2003, p. 82) reports the commentsof the Reserve Bank:

Prior to about 1995, rising rates of capacity utili-zation in the manufacturing sector usuallycoincided with heightened investment activityand, conversely, declining capacity utilization rateswith a slowdown in investment activity. This fairlywell established relationship broke down in thesecond half of the 1990s when low and falling ratesof capacity utilization in the manufacturingsector were accompanied by a fairly vigorouspick-up in investment spending. The reasons forthis deviation from the established pattern arenot entirely clear, but it is thought that the expen-diture on new technology expanded the absolutecapacity of the manufacturing sector by morethan what was anticipated, resulting in anincreased under-utilization of capacity at theprevailing levels of output.

Figure 9.2: Real Gross Fixed Capital Formation and Capacity Utilization in theManufacturing Sector, 1971–2003

2A part of the reported decline might be attributedto outsourcing insofar as outsourced jobs might becounted as non-manufacturing jobs.

35,000

15,000

20,000

25,000

30,000

0

5,000

10,000

88

80

82

84

86

72

74

76

78

Gro

ss fi

xed

form

atio

n (c

onst

ant 2

000

pric

es)

Per

cen

t

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

Real Gross Fixed Capital Formation Capacity Utilization


Other factors contributing to the rise in realfixed capital formation by the manufacturingsector since 1999 include:• the ageing of transport equipment and other

machinery and equipment;• increased rates of return on invested capital; and• the consistent decline in the cost of capital

relative to labour.

It is also possible (and not inconsistent withthe above explanations) that rising capitalinvestment, even in the face of falling capacityutilization, is related at least in part to changingrelative factor utilization, as distinct from anincrease in overall manufacturing capacity.

CAPITAL ACCUMULATION, OUTPUT,AND EMPLOYMENT

Table 9.1 presents a typology of possible com-binations of changes in output, capital stock,and employment, as well as an analysis of thenumber of sectors that fell into each categoryover the periods 1970–90 and 1991–2004.Sectors that experienced an increase in out-put are characterized as ‘expansionary’ whilethose whose output fell are characterized as‘contractionary’; these are further categorizedaccording to whether (net) investment ordisinvestment occurred (on the basis of thechange in capital stock); as well as whetheremployment increased or decreased. Produc-tivity changes are imputed from the changes inoutput and in capital and labour, respectively.

It is striking that 26 out of the 28 manu-facturing sectors in the first period—but onlysix in the second period—saw increases in out-put, capital stock, and employment.3 Thirteensectors in the second period (whereas nonein the first) witnessed employment loss

despite growth in their capital stock andoutput. Such a path is characterized here asexpansionary, labour-displacing investment.All sectors had positive employment growthin the first period, but in the second period onlya quarter of the sectors had positive employ-ment growth. The general positive correlationbetween growth in output, capital stock, andemployment seen during the first periodbroke down in the second period, whenemployment fell in most sectors despite thepositive growth in output and/or capital stock.

CAPITAL ACCUMULATION, FACTOR UTILIZATION,AND EMPLOYMENT

Figure 9.3 analyses changes in capital stock andrelative factor utilization for the 28 manufac-turing sectors. Three points are plotted foreach sectoral cluster: 1970, 1990, and 2004.Each of these points is a combination of thelevel of real capital stock and relative factorutilization (measured as the labour–capitalratio) for that sectoral cluster for the relevantyear. The key information conveyed in Figure9.3 is, however, the overall trend rather thanspecific sectoral information.

A movement of a sector in a north–easterlydirection would indicate both an increase inreal capital stock and an increase in relativefactor utilization, that is, both capital invest-ment and labour-intensification, with anunambiguously positive effect on employment.Conversely, a movement south–west wouldrepresent falling capital stock and fallingrelative factor utilization, in other wordsdisinvestment together with capital-intensifi-cation, as well as an unambiguously negativechange in employment. Third, as movementnorth-west would mean that a sector hadfalling real capital stock with increasingrelative factor utilization, meaning that therehad been capital disinvestment with labour

3Of course, the changes in capital stock andemployment would generally not be proportional, anaspect which is explored further in this paper.


Table 9.1: Typology and Empirical Occurance of Sectoral Accumulation Path

Change in Change in Change in Description Productivity Changes Empirical EmpiricalOutput Capital Employment Occurrence Occurrence

Stock 1970–90 1991–2004(no of sectors)

+ + + Expansionary, Changes in capital and 26 6labour- labour productivityabsorbing depend on relativeinvestment changes

+ + – Expansionary, Change in capitallabour- productivity depends ondisplacing relative changes; Risinginvestment labour productivity – 13

– + – Contractionary, Falling capital – –labour- productivity;displacing Change in labourinvestment productivity depends on

relative changes

– + + Contractionary, Falling capital and 1 –labour- labour productivityabsorbinginvestment

– – – Contraction, Changes in capital and – 2disinvestment, labour productivityemployment depend on relativeloss changes

– – + Contraction, Change in capital – –disinvestment, productivity depends onemployment relative changes; Fallingcreation labour productivity

+ – – Expansion, Rising capital and – 6disinvestment, labour productivityemploymentloss

+ – + Expansion, Rising capital 1 1disinvestment, productivity;employment Change in labour

productivity depends onrelative changes

Source: Author.


Figure 9.3: Sectoral Trends in Capital Stock and Relative Factor Utilization, 1970–1990–2004

Key:

Sector name SIC Key Sector name SIC Key Sector name SIC Key

Food 301–304 1 Coke & refined petrol 331–333 12 Machinery & 356–359 22Beverages 305 2 Basic chemicals 334 13 equipmentTobacco 306 3 Other chemicals & 335–336 14 Electrical machineryTextiles 311–312 4 man-made fibers & apparatus 361–366 23Wearing apparel 313–315 5 Rubber products 337 15 TV, radio, & comm. 371–373 24Leather & leather 316 6 Plastic products 338 16 equipment products Glass & glass products 341 17 Professional, & scientific 374–376 25Footwear 317 7 Non-metallic minerals 342 18 equipmentWood & wood 321–322 8 Basic iron & steel 351 19 Motor vehicles, parts, 381–383 26 products Basic non-ferrous 352 20 &accessoriesPaper & paper 323 9 metals Other transport 384–387 27 products Metal products excl. 353–355 21 equipmentPrinting, publishing, & 324–326 10 machinery Other manufacturing 392–393 28 recorded mediaFurniture 391 11

intensification, with an ambiguous net effecton employment. Finally, a movement south-east would be indicative of increasing capitalstock with falling relative factor utilization,that is, capital investment with capital inten-sification, again with an ambiguous net ef-fect on employment.

A general movement of sectors in thesouth-east direction is evident, that is, mostsectors become less labour intensive whileincreasing their real capital stock. A secondnoteworthy feature of this chart is the ‘axis-hugging’ movement of sectors. This indicatesthat sectors that started out with high levels

100

60

70

80

90

20

30

40

50

0

10

0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000

Rel

ativ

e Fa

ctor

Util

izat

ion

(L/K

)


of relative factor utilization (highly labour-intensive sectors) tended to see significantfalls in their labour intensity, without growingdramatically in terms of capital stock. On theother hand, sectors that started out with highlevels of capital stock and low levels of capitalintensity tended to have significant furtherrises in capital stock, with comparably stablebut slightly declining levels of relative factorutilization. Overall, sectors that werepreviously highly labour-intensive havetended to become less so, while highly capital-intensive sectors have generally increasedtheir capital stock without becoming morelabour-intensive.

To conclude this section, the following keyempirical trends can be highlighted.

• Manufacturing employment was at itshighest levels at the beginning and end of the1980s, but has since fallen and is currently atlevels not seen since the early 1970s. Totalemployment in the economy has also fallenfrom the peak levels of 1989–90.

• Capital stock rose by about 330 per centbetween 1971 and 2003.

• Capacity utilization has varied betweenabout 71 per cent and 86 per cent, with anoverall slightly downward trend.

• Since about 1995, investment has increaseddespite declining capacity utilization.

• Manufacturing has become increasinglycapital intensive, almost continuously since1971.

• Since 1991, only a quarter of the totalmanufacturing sectors had positive employ-ment growth, and the previous correlationat the sector-level between positive outputand investment and employment growthbroke down.

• Most manufacturing sectors have becomeincreasingly capital-intensive. Further, sectorsthat were initially highly labour-intensive havetended to become less labour-intensive, while

initially highly capital-intensive sectors havegenerally increased their capital stock withoutbecoming more labour-intensive.

ANALYSIS

INTRODUCTION: THE RELATIONSHIP BETWEENINVESTMENT AND EMPLOYMENT

Any g iven level of capital stock or ofinvestment could be associated with differentaccumulation paths, each with particulardistributional and employment implications,as well as differing degrees of long-termsustainability.

Accumulation may be capital wideningor capital deepening. With satisfactory ratesof profitability, firms may invest in a capital-widening manner, expanding capacity withoutany significant changes in the composition ofcapital or capital–labour ratios. Under theseconditions, we would expect to see increasesin output, capital stock, and employment,without a dramatic change in the labour–capital ratio.

However, as employment rises, the bargain-ing power of workers as well as wage ratesrise, thus squeezing profitability. A squeezeon profitability would tend to push firms intocapital deepening investment. Firms aredriven to acquire more ‘efficient’ capital inorder to remain competitive against domesticand foreign competitors. Investment underthese conditions would tend to be investmentin cost-cutting capital goods. This wouldmanifest in rising capital intensity.

South Africa has a huge reserve army oflabour, given that the ‘broad’ unemploymentrate exceeds 40 per cent. It may thus seemcounterintuitive that the type of mechanismdescribed here—where high and risingemployment increases workers’ bargainingpower and squeezes profitability—would beespecially powerful. However, the political


and institutional dynamics in South Africagive rise to similar effects, notwithstanding thehigh levels of unemployment. For example,factors such as the high levels of unionizationand working class mobilization, politicalalliance between the trade union federationCOSATU and the governing ANC, therelatively favourable labour market legislativeregime, and the institutionalized access oforganized workers to policy through fora suchas Nedlac,4 contribute to similar effects evenin the face of high rates of unemployment.

As discussed further elsewhere in this paper,non-cost factors also appear to be particularlyrelevant to relative factor utilization decisions.Anecdotal evidence suggests that firms maychoose to engage in labour-displacing capitalinvestment even where this is not strictly cost-efficient. Such dynamics need to be locatedwithin a broader socio-political context,including considerations of race and power.

Further, different types of competitive re-gimes may foster different investment patternswith associated differences in factor intensityand employment. Faced with intense competi-tive pressure—which could arise domesticallyor from (actual or potential) import penetra-tion—firms may respond by investing allavailable resources, those deriving fromprofits as well as those that can be borrowedthrough financial markets. Under such ‘coercedinvestment’, firms must accumulate in orderto survive, under the threat that failure toinvest adequately may result in their beingdriven out of the marketplace. Such invest-ment will tend to be capital-deepening andlabour-displacing.

The relationship between changes in fixedcapital stock and employment is thus complexand conjuncturally specific. Even in the short-to medium-term, and even abstracting fromthe broader factors raised above, investmentcould have various (potentially opposing)effects on employment, with an ambiguousoverall effect. These effects may beconceptualized as follows (leaving asidedepreciation for the time being).

Changes in capital stock (that is, net in-vestment) are of course related to changes inrelative factor utilization. The effect of newinvestment in fixed capital stock on measuredrelative factor utilization is contingent on themagnitude of any associated increase in em-ployment. Investment that actually displaceslabour, or that is associated with a less thanproportionate increase in employment, wouldceteris paribus lower the labour intensity ofproduction. Investment associated with aproportionate increase in employment wouldof course ceteris paribus have no effect onrelative factor utilization, while labour-absorbing investment associated with a morethan proportionate increase in employmentwould ceteris paribus increase the labourintensity of production.

DECOMPOSITION ANALYSIS OF CHANGESIN EMPLOYMENT

A basic model is conceptualized in whichemployment is a function of capacity, capacityutilization, and relative factor utilization. First,the overall level of ‘capacity’ in the economyis an indicator of the potential output of theeconomy if all the capital were to be fullyutilized, and is proxied by the entire fixedcapital stock. Second, capacity utilizationmeasures the extent to which the overall

4The National Economic Development and LabourCouncil, the statutory bargaining institution oneconomic and social policy.


Table 9.2: Possible Effects of Changes in Capital Stock (Net Capital Investment) on Employment

Effect Rationale Expected sign

Output effect Investment may be undertaken in order to increase Positive(extensive production using existing technologies andinvestment) production methods (labour-absorption)

Substitution effect Capital-deepening investment may displace labour Negative(intensive investment) at any given level of production

Productivity effects Efficiency effect—if output does not increase or Negativefrom investment does not increase proportionately, fewer workers

are required than previously

Output effect—higher productivity may lower Positivecosts which, if there is a simultaneous increasein demand, may lead to an increase output andhence employment; this may mitigate the negative‘efficiency effect’ of the productivity increase.

Source: Author

capacity in the economy is being productivelyused. Together, the levels of capital stock andof capacity utilization indicate the level of‘utilized capital’ or ‘effective capital’. Third, this‘effective capital’ can be utilized with a rangeof combinations of factors of production, ordifferent ratios of labour to ‘effective capital’.

Each of these three levels can be understoodas having a variety of (direct and indirect)determinants, with substantial overlap. Fur-ther, the identification of these factors andtheir relative prioritization would be affectedby the ideological and theoretical stance taken,as well as by empirical methodologies andresults. This conceptualization thus allows fordifferent views and interpretations of factorsthat would influence each of the three levels,making it a conducive framework for under-standing the determinants of employment.

One way of explaining the overall level ofemployment is thus through the underlyingcausal determinants of each of these three

components. Understanding the relativeimportance and the nature of the determinantswould be important to getting to grips withthe basic factors affecting the level ofemployment, and hence potentially sheddinglight on areas for policy intervention in orderto increase the same.

First, determinants of capital stock couldpotentially include factors such as rates ofprofit and expectations of future profits, thelevel and composition of public investment,political and social conditions, access to andcost of borrowed capital, enterprise balancesheets and cash flows, savings rates, net capitalflows, risk and uncertainty, relative investmentconditions and international rates of return,the tax structure and industrial incentives, thestructure and conduct of financial institutions,and the rates of utilization of existing capacity.It should also be noted that capital stock is nothomogenous and is not a ‘neutral’ indicatorof potential output—various characteristics of


the capital stock such as its sectoral distributionand its state of technology would be relevantto its potential productivity.

The second component, the rate of capac-ity utilization, would tend to be influencedprimarily by the level and composition ofaggregate demand, which in turn could beinfluenced by factors such as income distri-bution, gross wages, employment, net importpenetration, and the level and compositionof government expenditure.5

Third, relative factor utilization (labourintensity) could be influenced by factors suchas relative factor productivity as well as relativefactor costs, factor substitutability, political,social, and distributional issues, the labourmarket regime, work organization, fiscal policy,skills, exogenous technologies, and class andbargaining power.

Formalizing the conceptual approachoutlined here, the relationship between capitalstock, capacity utilization, relative factorutilization, and employment, can be expressedas follows.

Lt = at • lt • Kt

where:

Lt = employment at time tat = relative factor intensity at time tlt = capacity utilization at time tKt = capital stock at time t

or as an identity, and omitting the timesubscripts:

L

LK

K!l

l• •

where

LKl

a= is the ratio of labour to utilizedcapital.6

This allows for a three-stage decomposi-tion for the manufacturing sector, for whichcapacity utilization is available.7 The decom-position analysis is based on the following:

DL K Kt t t t t t= a l a l– – – –1 1 1

=

+ÊËÁ

ˆ¯̃

( – )–– –a a l l

t tt t t tK K

factor utilization effect

11 1

2

+

+ÊËÁ

ˆ¯̃

+ÊËÁ

ˆ¯̃

( – )–– –l l a a

t tt t t tK K

capacity utilization effect

11 1

2 2

+

+ÊËÁ

ˆ¯̃

+ÊËÁ

ˆ¯̃

( – )–– –K K

capital stock effect

t tt t t t

11 1

2 2l l a a

The results of this decomposition ofmanufacturing sector employment into thecapital effect, the capacity utilization effect, andthe factor utilization effect are shown in Table

5In addition, careful interpretation is called for,particularly capacity utilization, especially given that itis measured as a percentage and hence cannot risebeyond a ceiling, unlike the other variables. Even ifcapacity utilization and aggregate demand are in factcausally significant, one would not expect to see aprolonged high capacity utilization effect. If risingaggregate demand pushes up the level of capacityutilization, this may prompt new investment such thatthe capital stock is expanded. This may result in littleapparent change in the measured level of capacityutilization, or even a short-term decline. In other words,some of the effects of high or rising demand (whetherat the aggregate, sectoral, or f irm level) may bemanifested in high levels of capacity utilization, and tosome extent in increasing capital stock. Even if aggregatedemand is highly causally significant, this would notnecessarily reflect in an ongoing rise in capacityutilization, as rising capacity utilization (probably over acertain threshold) would trigger higher investment.

6Or in growth rates, ln L = ln

LKl

+ ln l + ln K.7Note that the period is truncated by a year on either

side for this analysis given the availability of capacityutilization data.


9.3 and Figure 9.4. The table summarizes thechanges over two broad periods, 1971–90and 1991–2003, while the figure shows thedecomposition of the changes on a year-on-year basis.

Comparing the two broad periods, it isnotable that the capital effect was positive inboth periods, while the capacity utilization andfactor utilization effects were both negative.However, there was a major shift in relativemagnitudes of the different effects in the twoperiods, associated with the fact that there waspositive employment growth in the first periodbut employment losses in the second. Whilethe capital effect was significantly greater thanthe factor utilization effect between 1971 and1990, during the period 1991–2003 the factorutilization effect far exceeded the capital effect.

Figure 9.4 shows that the capital effect waspositive with the exception of a period in thelate 1980s, although it did seem to show a

declining trend overall. There appears to be abroad positive relationship between the capitaland capacity utilization effects, particularly inthe earlier years. The factor utilization effectwas fairly volatile, but was negative for 27 ofthe 32 years. Although these results do notelucidate the underlying causal relationships,

Table 9.3: Decomposition of Changesin Manufacturing Employment:

Summary of Results

1971–90 1991–2003

Capital effect 1265302.37 335605.90

Capacity utilization -40927.00 -23509.64 effect

Factor utilization -812620.36 -575411.26 effect

Total employment 411755 -263315 change

Figure 9.4: Decomposition of Total Manufacturing Employment Changes by Year,1972–2003

200,000

-50,000

0

50,000

100,000

150,000

-200,000

-150,000

-100,000

Factor utilization effect Capacity utilization effect Capital effect Total employment change

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003


they do suggest the importance of the factorutilization effect in accounting for the pooremployment performance of the manufac-turing sector, particularly since about 1989.These results are discussed fully in the fourthsection.

SECTORAL ANALYSIS

The following series of figures presents theresults of the decomposition analysis for allthe manufacturing sectors. The sectors areclustered into 19 groups of related sub-sectorsfor brevity of exposition.8

Figure 9.5 decomposes the capital, capacityutilization, and factor utilization effects for

the food, beverages, and tobacco sub-sectors.The capital effect is generally positive, althoughit is noteworthy that it is negative from 1999onwards. Visual inspection suggests a positiveassociation between the capital and capacityutilization effects for much of the period. Thefactor utilization effect is mostly negative, butis volatile.

One of the striking features of the trendsin the textiles, wearing apparel, leather andleather products, and footwear sectors (below)is that the capital effect does not appear to beparticularly significant (in magnitude) for thissector, unlike that in many other sectors. Incertain periods in particular—such as most

8Sectors are clustered as follows (numbers refer toSIC codes): Food, Beverages, and Tobacco (301–306);Textiles, Wearing Apparel, Leather & leather products,and Footwear (311–317); Wood & wood products, Paper& paper products, Printing, publishing, per centrecorded media, and Furniture (321–326 & 391); Coke& refined petroleum, Basic chemicals, Other chemicals& man-made fibres, Rubber products, Plastic products,

Figure 9.5: Decomposition of Capital, Capacity Utilization, and Factor UtilizationEffects in Change of Employment: Food, Beverages, and Tobacco, 1971–2003

Glass & glass products, and Non-metallic minerals (331–342); Basic iron & steel, Basic non-ferrous metals, Metalproducts excluding machinery (351–355); Machinery &equipment, Electrical machinery & apparatus, Television,radio, & communication equipment, Professional &scientific equipment (356–376); Motor vehicles, parts, andaccessories, and Other transport equipment (381–387);and Other manufacturing (392–393).

30,000

1972

-10,000

0

10,000

20,000

-40,000

-30,000

-20,000Cha

nge

in e

mpl

oym

ent

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

Capital effect Capacity utilization effect Factor utilization effect Total change in employment


of the 1980s and the period from the mid-1990sonwards—the overall change in employmentappears to be particularly strongly associatedwith the factor utilization effect. Interestingly,this is not only during periods of job loss, butalso during periods of job growth.

Two periods of job growth, with apparentlydistinctive dynamics, can be commented onin this regard. First, in the mid- to late-1980s,there was employment growth, together withlabour-intensification of production, and a fallin the real capital stock. This might suggest atime of little investment (or even capitalstripping) and a more labour-intensive use ofexisting capital stock, as well as rising capacityutilization of that capital stock. This can bedistinguished from the apparent dynamics ofthe brief period of job creation in the mid-1990s, when labour intensification went alongwith a positive capital effect and a negativecapacity utilization effect. A possible storycompatible with these results would be

moderate but positive levels of investment,but which was labour-absorbing in nature.

Next, we look at a cluster of sub-sectorsincluding wood and wood products, paperand paper products, printing, publishing, andrecorded media, and furniture. A striking resultin this case is the apparent inverse associationbetween the capital and factor utilization effects,which appear to be of opposite sign and movingin opposite directions for virtually the entireperiod. This might be taken as suggesting thatcapital and labour could be substitutes in theproduction process in these sub-sectors, to agreater extent than in other sectors.

Figure 9.8 shows the results for thechemical and related sectors. The picture variesconsiderably for different periods of time. Onenoticeable difference from most other sectorsis the significant relative contribution of thecapacity utilization effect, which in this caseshows substantial variation and is also large insize. In the 1990s, the capital effect is positive,

Figure 9.6: Decomposition of Capital, Capacity Utilization, and Factor UtilizationEffects in Change of Employment: Textiles, Wearing Apparel, Leather & Leather

Products, Footwear, 1971–2003

40,000

10,000

20,000

30,000

-20,000

-10,000

0

-40,000

-30,000

Cha

nge

in e

mpl

oym

ent

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003



Figure 9.7: Decomposition of Capital, Capacity Utilization, and Factor Utilization Effectsin Change of Employment: Wood & Wood Products, Paper & Paper Products, Printing

Publishing & Recorded Media, & Furniture, 1971–2003

Figure 9.8: Decomposition of Capital, Capacity Utilization, and Factor Utilization Effectsin Change of Employment: Coke & Refined Petroleum, Chemicals, Rubber, Plastic,

Glass & Glass Products, and Non-metallic Minerals, 1971–2003

25,000

10,000

15,000

20,000

-5,000

0

5000

-15,000

-10,000Cha

nge

in e

mpl

oym

ent

1972


-25,000

-20,000

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

20,000

5000

10,000

15,000

-10,000

-5000

0

-20,000

-15,000Cha

nge

in e

mpl

oym

ent

-30,000

-25,000


1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003


but this is more than outweighed by theincreasing capital intensity of production in thesub-sectors.

Next, the trends are analysed for the basiciron and steel, basic non-ferrous metals, andmetal products (excluding machinery) sub-sectors (see Figure 9.8). It is difficult to ascertainclear trends from which conclusions can bedrawn in this case. The capital effect is mostlypositive, although it has been negative since1998. The capacity utilization effect variesin a possibly cyclical manner. The factorutilization effect also varies considerably,although it is more negative than positive.

Figure 9.10 presents the results of the de-composition analysis for the following sectors:machinery and equipment, electrical ma-chinery and apparatus, television, radio, andcommunications equipment, and professionaland scientific equipment. The overall changein employment seems to be closely associatedwith the capital and capacity utilization effects

until about the mid-1980s, after which thereappears to be a continued close associationbetween the overall employment change andthe capacity utilization effect. Since about1996, the overall employment change appearsto be most closely associated with the factorutilization effect. There is considerable vola-tility in all three effects over the entire period.

Figure 9.11 shows the trends for the motorvehicles, parts, and accessories, and othertransport equipment sub-sectors. In this case,the capital effect is positive for almost theentire period, and it has been positive withan increasing trend since 1989. Spikes inemployment growth appear to be associatedwith periods in which the capacity utilizationeffect was positive and large. The factorutilization effect varies but is mostly negative,and has been negative since 1997.

Finally, the effects for the ‘other’ manufac-turing subsectors are decomposed and shownin Figure 9.12. Not much change is evident

Figure 9.9: Decomposition of Capital, Capacity Utilization, and Factor UtilizationEffects in Change of Employment: Basic Iron & Steel, Basic Non-ferrous Metals,

Metal Products excl. Machinery, 1971–2003

40,000

10,000

20,000

30,000

-10,000

0

-20,000Cha

nge

in e

mpl

oym

ent

-40,000

-30,000


1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003


Figure 9.10: Decomposition of Capital, Capacity Utilization, and Factor Utilization Effects inChange of Employment: Machinery & Equipment, Electrical Machinery & Apparatus, TV,

Radio & Communications Equipment, Professional & Scientific Equipment, 1971–2003

Figure 9.11: Decomposition of Capital, Capacity Utilization, and Factor UtilizationEffects in Change of Employment: Motor Vehicles, Parts & Accessories, and Other

Transport Equipment, 1971–2003

20,000

5000

10,000

15,000

0

-5000Cha

nge

in e

mpl

oym

ent

-15,000

-10,000

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003


1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

20,000

5000

10,000

15,000

0

-10,000

Cha

nge

in e

mpl

oym

ent

-20,000

-15,000

-5000



until the mid-1980s, and there is considerablevolatility thereafter. The capital effect ismostly positive, the capacity utilization effectvaries around 0, and the factor utilization ef-fect is mostly positive. There appears to be avery strong positive association between thefactor utilization effect and overall employ-ment change since the early 1990s.

DISCUSSIONThe long-term objective of this research is tounderstand the causes behind the changes inemployment in South Africa, in order toformulate appropriate policy implications toincrease the level of sustainable employment.The objective of the decomposition exercisesand other empirical analysis undertaken inthis paper is to get some sense of the relativeimportance of changes in capital stock, capacityutilization, and relative factor utilization,respectively, in accounting for changes in

employment in South Africa. Decompositionanalysis, albeit a rather mechanical accountingexercise, can at least point towards possibleexplanations and directions for further research.In this section we discuss how to interpretthe decomposition analysis and possibleimplications of different possible outcomes,before commenting on the particular resultsobtained in this paper.

The simple model used as the basis forthe decomposition exercise in this paper isintended as an initial analytical tool for theanalysis of employment in particular periods,rather than being theoretically pre-emptive.Understanding where the major constraints tolabour demand lie in a particular conjuncture—whether with: (i) insufficient capital stock,(ii) low levels of utilization of existing capitalstock, or (iii) highly capital-intensiveproduction with the capital stock that is beingutilized—may assist in identifying the major

Figure 9.12: Decomposition of Capital, Capacity Utilization, and Factor Utilization Effectsin Change of Employment: Other Manufacturing, 1971–2003

10,000

4000

6000

8000

2000

-2000Cha

nge

in e

mpl

oym

ent

-8000

-4000

0

-6000

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003



blockages to increasing labour demand andultimately reducing unemployment, and hencein prioritizing policy interventions.

Broadly speaking, an analysis that pointsto the relative importance of the capital stockeffect, particularly in accounting for a negativechange in employment, might be interpretedas suggesting that the unemployment is pri-marily ‘Classical’ in nature. Such an analysismight suggest the need for increasing theoverall level of capacity in the economy byincreasing the overall level of capital stock.There could be various policy interventionsconsistent with such an analysis, with varyingpolitical and economic implications, par-ticularly in terms of distribution. Three suchapproaches to increasing capital stock arebriefly reviewed here.

First, policy informed by such an outcome(if determined empirically), could focus onincreasing the future profit expectations ofprivate investors, as well as bolstering the cer-tainty with which these expectations are held.Interventions in this vein could include fiscalpolicies that increase enterprise profitabilityor dividend payouts, measures to reduce theshare of output going to workers and increasethe share going to capitalists, a range of pos-sible measures that could increase workerproductivity, infrastructure that increases thereturns on private investment, and policiesthat increase investors’ perception of the over-all certainty of the political and economicenvironment.

An alternative set of policies informed byan analysis that found changes in capital stockto be significant in accounting for changes inemployment, could focus on increasing thelevels of private investment through moredirect measures that partially socialize thecontrol of private investment. These mightinclude the use of prescribed asset measures orsome variant thereof, capital controls designed

to minimize the leakage of South Africancapital abroad and maximize the capitalavailable for domestic productive investment,or directed credit policies.

A third alternative set of policies, stillfocusing on capital investment, could capitalizeon the more direct state control over the levelof public investment in order to raise the levelof aggregate investment. This could involvesignificantly boosting public spending onphysical capital. Such interventions wouldprima facie increase the public component ofaggregate capital stock, as well as affectingthe level of private investment.

The possible sets of policy interventionsdiscussed above—focusing on capital stock—are not necessarily mutually exclusive, althoughthey would tend to be consistent with differentviews of the primary constraints on increasinginvestment in the South African economy, andon the appropriate political and economicroles of the state and private capitalist sector,respectively. This, however, is not the focusof this particular paper.

Second, an analysis that pointed to therelative importance of the capacity utilizationeffect in accounting for changes in the levelof employment might point to problems ofrealization, where firms are unable to sell alloutput at full value, and hence lower theirlevels of production. Domestically, problemsof realization are indicative of an imbalancebetween the structure of production and thedistribution of demand, which is a function ofthe distribution of income which is, in turn,determined by factors such as technology andclass struggle.

A finding of the relative significance ofthe capacity utilization effect might suggestthat unemployment is more ‘Keynesian’ innature, with sellers being on the long end ofboth the labour and goods markets. Such afinding could point to policies geared towards


increasing levels of capacity utilization,primarily through increasing the level ofaggregate demand in the economy.

Policies designed with the above in mindwould be consistent with some of the possiblemeasures already mentioned with respectto increasing capital stock—notably withincreasing the levels of public investment.However, tensions are likely to arise betweenmeasures to increase capacity utilization andother potential policies increasing capital stock,notably with the first set of policies mentionedhere. For example, ‘profit-led’ interventionsintended to induce higher levels of privatesector investment by reducing the share ofoutput going to workers would be likely todepress the level of aggregate demand in theeconomy and actually deepen the capacityutilization constraint.

Policies to increase the level of aggregatedemand in the economy, and hence the levelof capacity utilization, might thus include in-creasing the share of output going to workers,increasing redistributive public spending tothe poor, increasing public investment, exportpromotion, and protection of domestic indus-try through trade and industrial measures. Ofcourse, as with the policy options to increaseinvestment discussed above, various measurescould be proposed to increase aggregatedemand, with different implications distribu-tionally and in other ways.

Third, should the evidence suggest thatchanges in relative factor utilization aresignificant in accounting for changes inemployment, it would imply that merelyincreasing the levels of capital stock or ofcapacity utilization would be unlikely todecisively address the high levels of unem-ployment in South Africa. Various policy in-terventions could then be conceptualized to-wards changing the relative factor utilization.Appropriate measures in this regard would

depend on the root causes of the level andchanges in relative factor utilization.

If the level of, or change in, relative factorutilization is primarily driven by relative factorprices, this could point to policies intendedto affect the prices or productivity of capitaland/or labour. We also hypothesize that relativefactor utilization is influenced by broaderpolitical economy issues, such as patterns ofdistribution, class and bargaining power, andwork organization. Addressing these wouldinvolve broader transformation.

Policies addressed to each of the threedimensions of the analytical framework em-ployed in this paper—capital stock, capacityutilization, and relative factor utilization—could have distinct distributional implications.Changes in either the levels of capital stock,of capacity utilization, or of relative factorutilization, each at an order of magnitudeassociated with the same increase in employ-ment, would bring differential returns tocapital and labour. Changing relative factorutilization in a labour-intensive directionwould possibly be more beneficial to labourrelative to capital, from a distributional per-spective. Of course, any assessment of thedistributional implications of changes incapital stock, capacity utilization, and relativefactor utilization would be contingent on themanner in which such changes are broughtabout. For example, with respect to capitalstock, three different policy paradigms havebeen discussed, each of which would have verydifferent distributional implications.

Following on from the general interpre-tation of the decomposition analysis andpossible policy implications, we now turn tocommenting on the conclusions that can bedrawn from the results of the actual analysisin this paper.

The capital effect accounts for a positivecontribution to labour demand throughout,


with the exception of a period in the late 1980s.The changes in labour demand accounted forby changes in capacity utilization vary overdifferent years, but with an overall negativecontribution. The most striking result is interms of relative factor utilization, with adramatic and almost continuous fall in the ratioof labour employed to utilized capital. Thedrop in the labour intensity of productionaccounts for an overwhelmingly negativechange in labour demand in manufacturing.During the period 1991–2003, when a net lossin employment was observed, the negativefactor utilization effect significantly exceededthe positive capital effect.

Although this paper is restricted to themanufacturing sector, due to space constraints,the rest of the South African economy wasalso analysed in the framework and using themethods discussed here, and these economy-wide results are briefly reflected on. Ascapacity utilization data are not available forthe non-manufacturing sectors, a two-stagedecomposition analysis was carried out—decomposing changes in employment into acapital effect and a factor utilization effect. Asimilar picture obtains as with manufacturing.The capital effect was positive and the factorutilization effect negative in both periods1970–90 and 1991–2004. However, there wereimportant shifts in their relative magnitudes.In the first period, with positive employmentgrowth, the capital effect was more thandouble the factor utilization effect. Bycontrast, in the second period, with an overallemployment loss, the factor utilization effectsomewhat exceeded the capital effect.

The finding of the overwhelmingly nega-tive contribution (in a simple decompositionsense) of the factor intensity effect to changesin manufacturing employment, is consistentwith other results in the literature (derived

using different methodologies). It is notewor-thy that South Africa’s economy has becomeincreasingly capital intensive, despite the risingunemployment and the fact that levels ofunemployment are much higher than thoseof South Africa’s trading partners and othercountries at similar levels of development.

One difficulty in interpreting the resultsobtained from this research arises from thefact that one would expect capital stock to riseover time with the growth of the economy,and in addition that the labour intensity ofproduction would typically fall over timewith an economy’s development and withtechnological advances. In this light, thefinding that the capital stock effect ‘accounts’for a positive growth in employment, and thefactor utilization effect ‘accounts’ for a lossin employment, is hardly surprising. It isimportant to evaluate to what extent the trendsin South Africa are ‘normal’ and consistentwith the country’s level and pace of economicdevelopment, and to what extent they areanomalous or excessive. Such an evaluation,however, presents ontological problems,insofar as it posits or assumes benchmarklevels and a linear developmental trajectory.Nevertheless, South Africa’s rate of capitalintensification does appear to be high relativeto that in comparable countries. Further, SouthAfrica’s current level of capital intensity doesappear to be significantly higher than wouldbe predicted on the basis of relative factorcosts and labour abundance.

Further research, not fully discussed hereowing to constraints of space but availablefrom the author on request, analyses changesin relative factor utilization in the SouthAfrican economy in greater detail. Inter alia,decomposition techniques were used in anattempt to separate out the extent to whichchanges in economy-wide relative factor


utilization can be accounted for by intersectoralchanges (shifts in the sectoral composition ofthe economy) as opposed to intrasectoralchanges.9 From 1970–90, both the compositionand sectoral effects were negative, and wereof a roughly similar order of magnitude. During1991–2004, by contrast, the composition effectwas marginally positive, and the sectoraleffect negative. This would suggest that in thesecond period, it was intra-sectoral changesin the labour–capital ratio, rather than changesin the sectoral composition of the economy,that accounted for the overall decline in thelabour-capital ratio.

CONCLUDING REMARKSThe results of this research suggest thatcapital investment alone is insufficient foremployment creation. In fact, certain typesof capital investment may actually reduceemployment. It appears that much of the in-vestment that has occurred in South Africanmanufacturing has been labour-displacingrather than labour-absorbing. Of course, in acomplete aggregate and dynamic analysis, thelatter types of labour-displacing investmentmay create employment elsewhere in theeconomy, through enhanced efficiency andmultiplier effects of increased output. Nev-

ertheless, the overall relationship betweencapital investment and employment remainsambiguous and contingent on the nature ofthe investment.

There is likely to be a socially sub-optimal,excessively high capital–labour ratio, giventhat decisions of private firm with respect toinvestment and production method do notconsider the social benefits of higher employ-ment that are not captured by the individualprivate firm, and similarly the social costs oflabour-displacing private employment thatare not borne by the individual firm.

If the capital intensification of the economycontinues, increasing net investment wouldbe required simply to maintain the current,inadequate levels of labour demand; evenhigher rates of increase in net investmentwould be required to absorb net new labourentrants and maintain the current levels ofunemployed people; and still higher rates ofincrease in net investment would be requiredto begin to reduce the number of unemployedpeople. Shifting towards more labour-intensiveproduction—either through sectoral shifts, and/or through changes in technology—wouldmean that lower levels of net new investmentwould be required than would otherwise bethe case in order to achieve a reduction inunemployment; or to put it differently, greaterreductions in unemployment can be achievedat the same levels of net new investment.

This serves to emphasize that it is notmerely the overall quantity of capital stock (orthe level of investment) that is important, butalso the ‘quality’ of this capital. ‘Quality’ couldhave various dimensions, one of particularrelevance to this paper being the degree towhich it is labour-absorbing in a sustainablemanner. This would be influenced by variousfactors, including the sector, type of productwithin the sector, technology choices, and so

9The labour–capital ratio was decomposed into thecomposition and sectoral effects as follows:

Dg

g g

=

+ÊËÁ

ˆ¯̃=

Â( – )––k k

composition effect

ti

ti

i

nti

ti

11

1

2

+

+ÊËÁ

ˆ¯̃=

Â( – )

sec

––g gt

iti

i

nti

tik k

toral effect

11

1

2

where g is the overall labour/capital ratio and g ti is the

ratio in sector i at time t, and kti is sector i’s share of to

fixed capital stock at time t. A similar method was usedto decompose changes in the labour–output ratio.


on. All of these could be subject to policyinterventions intended to make investmentmore labour-absorbing rather than labour-displacing. With a shift towards more labour-absorbing investment, a higher labour demandgrowth path may actually require lowerabsolute levels of capital investment thanotherwise.

An analysis that points to the importanceof capital intensification in accounting foremployment losses (and the absence of employ-ment creation) does not, in itself, automaticallypoint to the reversing of capital intensificationas the obvious and central policy interventionfor employment creation. An argument couldbe made for a focus on sectors which mightnot be the most labour-intensive, but whichmight still have the highest overall effects onemployment once employment multipliersare taken into account.

Further, this analysis should not be inter-preted as ignoring or downplaying the needfor new investment. As discussed in the initialconceptualization, labour demand can beincreased through an increase in capacity, incapacity utilization, or in the labour intensitywith which capacity is utilized. Further, thereare obviously limits to the extent to whichemployment can be generated through in-creasing the labour intensity of production.Particularly in an open economy, competitive-ness could be undermined when the individualfirm costs of more labour intensive productionbecome individually ‘inefficient’. This servesto emphasize the need for an integratedapproach including supportive macroeco-nomic, industrial, and trade policies.

REFERENCESBhorat, Haroon (1999), ‘Decomposing Shifts in

Labour Demand in South Africa’. SouthernAfrican Journal of Economics, Vol. 67, No. 3, p. 348.

‘The Impact of Trade, and Structural Changeson Sectoral Employment in South Africa’,TIPS, Development Southern Africa, Vol. 17, No.3, pp. 437–66.

Bhorat, Haroon and Morné Oosthuizen (2005),‘The Post-Apartheid South African LabourMarket’, Development Policy Research UnitWorking Paper 05/93, April.

Bhorat, Haroon, Sten Dielten, and James Hodge,‘The Impact of Structural and ProductionMethod Changes on Employment Growth ofOccupational Groups in South Africa’, HSRC,Pretoria, unpublished paper.

Crotty, James (1993), ‘Rethinking MarxianInvestment Theory: Keynes-Minsky Instability,Competitive Regime Shifts, and CoercedInvestment’, Review of Radical Political Economics,March 1992, Vol. 25, No. 1, pp. 1–26.

(1993), ‘Neoclassical and KeynesianApproaches to the Theory of Investment’,Journal of Post Keynesian Economics, Vol. 14,No. 4, Summer 1992, pp. 483–96.

Edwards, L. (1999), ‘Trade Liberalisation, StructuralChange and Occupational Employment inSouth Africa’, Paper presented at TIPS 1999Annual Forum, Muldersdrift.

(2001), ‘Trade and the Structure of SouthAfrican Production, 1984–97’, DevelopmentSouthern Africa, Vol. 18, No. 4, October, pp. 471–91.

Fedderke, Johannes, Simon Henderson, MautineMariotti, and Prabhat Vaze (2000), ‘ChangingFactor Market Conditions in South Africa: TheLabour Market—a Sectoral Description of thePeriod 1972–1997’, Econometric ResearchSouthern Africa, Policy Paper No. 5.

Heintz, J. (2001), ‘Investment, Labour Demandand Political Conflict in South Africa’, PhDDissertation, University of MassachusettsAmherst, May.

Levy, Brian (1992), ‘How Can South African Manu-facturing Efficiently Create Employment? AnAnalysis of the Impact of Trade and Indus-trial Policy’, Informal Discussion Paper onAspects of the Economy of South Africa No.1,


Southern Africa Department, World Bank,Washington.

Malinvaud, E. (1977), The Theory of UnemploymentReconsidered, Basil Blackwell, Oxford.

Nattrass, N. (2000), ‘Is South Africa’s High-productivity Growth Strategy Appropriate ina Labour-surplus Economy?’, Paper presentedat TIPS Annual Forum 2000.

Poswell, Laura (2002), ‘The Post-ApartheidSouth African Labour Market: A StatusReport’, Development Policy Research Unit,Rondebosch.

Smith, H. (2003), ‘Note on the Chang ingStructure of the Manufacturing Sector’, South

African Reserve Bank Quarterly Bulletin, March,pp. 79–87.

Statistics South Africa (2005), Labour Force SurveyMarch 2005, Statistics South Africa, Pretoria.

Tregenna, Fiona (2003), ‘Background Paper onDeterminants of Labour Demand in SouthAfrica’ Report prepared for Employment andEconomic Policy Research, HSRC, Pretoria.

Wakeford, Jeremy (2004), ‘The Productivity-WageRelationship in South Africa: An EmpiricalInvestigation’, Development Southern Africa, Vol.21, No. 1, March, pp. 109–132.

Documents

Accounting for Changes in Manufacturing Employment in ... for Changes in... · ACCOUNTING FOR CHANGES IN MANUFACTURING EMPLOYMENT IN SOUTH AFRICA 139 1980s. After hitting highs at