Labour market effects of the great lockdown in South Africa: Earnings and employment during 2020–2022

Aidan J. Horn and Andrew R. Donaldson
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Aidan J. Horn: Southern Africa Labour and Development Research Unit, University of Cape Town
Andrew R. Donaldson: Southern Africa Labour and Development Research Unit, University of Cape Town

No 279, SALDRU Working Papers from Southern Africa Labour and Development Research Unit, University of Cape Town

Abstract: This paper quantifies the impact of the covid-19 economic shock on aggregate earnings and employment by industry in South Africa. We construct pre-covid-19 counterfactual forecasts for the 2020 Q2 – 2022 Q4 period and compare these with reported earnings and employment levels up to 2021 Q1. We find that total compensation of employees in 2020 Q2 was 9% below forecast while employment was 14% lower than the counterfactual. Between 2020 Q2 and 2021 Q1, aggregate earnings recovered more than three times as quickly as employment, indicating a rise in inequality. We calculate possible recovery paths of earnings and employment to 2022 Q4. We outline implications for the Unemployment Insurance Fund and suggest ways in which the employment recovery might be accelerated.

Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:ldr:wpaper:279

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