Will Lower Wages Cause Faster Growth in South Africa?

B Gibson

Studies in Economics and Econometrics, 2000, vol. 24, issue 3, 143-163

Abstract: Higher wages for unskilled workers will probably improve the distribution of income, but the impact of wage movements on employment depends crucially on the macroeconomic context. Whereas a restrictive fiscal and monetary stance impedes job creation, a more expansionary set of macroeconomic policies will have a positive effect on employment, albeit at the cost of inflation If wage bargains spill over into the public sector, then, assuming a PSBR constraint is in force, public investment will adjust and the economy will become less stable. Despite the (slight) profit-led character of the South African economy, it is mainly policy that stands in the way of a more equalised distribution of income, not market forces, the private sector, international investors or any other special feature of the South African economy.

Date: 2000
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DOI: 10.1080/03796205.2000.12129281

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