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Wages, Productivity and L abour's Declining Income Share in Post‐ A partheid S outh A frica
Author(s) -
Burger Philippe
Publication year - 2015
Publication title -
south african journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.502
H-Index - 31
eISSN - 1813-6982
pISSN - 0038-2280
DOI - 10.1111/saje.12092
Subject(s) - economics , labour economics , productivity , investment (military) , capital (architecture) , wage share , efficiency wage , wage , macroeconomics , history , archaeology , politics , political science , law
The M arikana incident in 2012, as well as the protracted strikes by platinum miners, metal and postal workers in 2014 suggest that not all is well in the S outh A frican labour market. Even though those in employment are better off than the unemployed poor, macroeconomic data indicate that labour's share in gross value added has declined significantly during the first two decades following the first democratic election in 1994. A falling share of labour in income also means, by definition, that average labour productivity growth outstrips real wages growth. Data for S outh A frica suggest that productivity has indeed increased faster than wages in S outh A frica. This article argues that financialisation and more aggressive returns‐oriented investment strategies applied by for instance large investment institutions translated into higher required rates of return on capital, which in turn caused an increased implementation of capital‐augmenting labour‐saving technology that reduces labour's share in income.