Changing pattern of inequality in greater Johannesburg – From low wages to no wages

In the second part of his thought-provoking blog series on urban inequality, guest blogger Owen Crankshaw delves into the intricacies of employment patterns in Johannesburg. Curated by David Satterthwaite, this series challenges conventional wisdom by exploring census data and shedding light on the reasons behind workforce inequalities.

According to the International Institute for Environment and Development, one of the key questions posed in this analysis is whether the economically-active population in global cities like Johannesburg is becoming increasingly divided into two occupational classes: low-paid service sector jobs and highly-paid professionals, technicians, and managers. Alternatively, another claim suggests that the employed population is experiencing overall skill enhancement and better pay alongside a rise in unemployment. These opposing viewpoints are the social polarisation theory and the professionalisation theory, respectively.

Advocates of the social polarisation theory contend that inequality stems from the concentration of employed workers at the extreme ends of the earnings distribution. Conversely, proponents of the professionalisation theory argue that inequality arises from the concentration of employed workers at the higher end of the earnings spectrum, accompanied by growing unemployment.

To test these competing theories, a study examining employment trends in Gauteng Province, known as greater Johannesburg, becomes particularly significant. This region offers valuable insights because long-term employment trends indicate a professionalisation of occupations and earnings among employed workers, coinciding with rising levels of unemployment among low-skilled workers.

Also read: Gauteng Residents Suffer from High Levels of Unemployment in the Millions

The study reveals employment trends showcasing more people in middle- and high-income occupations compared to low-income occupations. This finding serves as a critical examination of the social polarisation theory, as greater Johannesburg satisfies the three conditions often cited as its leading causes:

1. 1. The labour market underwent significant deindustrialisation, resulting in a reduced number of middle-income manual workers in the manufacturing sector and an increase in low- and high-income workers in the service sector.
2. A comprehensive supply of low-skilled labour is present. Therefore, scholars argue that social polarisation can only occur with the influx of low-skilled workers into deindustrialising cities, as the increased supply of such workers leads to the growth of low-wage employment that is essential for social polarisation to take hold.
3. Substantial unemployment benefits for the unemployed are absent. Scholars posit that the absence of unemployment benefits compels low-skilled workers to accept low-paid jobs they would otherwise avoid, thus contributing to social polarisation.

According to these theories, employment trends in greater Johannesburg should demonstrate a polarising trend with significant growth in low- and high-income jobs and a decline in middle-income jobs. However, the study of employment trends from 1970 to 2011 indicates a trend of professionalisation. It reveals that employment growth was more prominent in middle- and high-income jobs. In contrast, growth in low-income jobs was comparatively limited. Concurrently, unemployment among low-skilled workers increased.

The data shows that in 1970, 64% of all workers were employed in low- and middle-income manual jobs while analysing population censuses. By 2011, this figure had shrunk to only 40%. In contrast, the percentage of workers in high-income managerial, professional, and technical roles rose from 19% in 1970 to 28%.

Also read: South Africa’s unemployment rate rises to 32.9%

Middle-income clerical, sales, and service jobs also experienced growth, increasing from 14% of all employment in 1970 to 31% in 2011. In the same period, unemployment went from 5% to 26%.

These findings reveal that middle- and high-income jobs grew more than low-income jobs. Specifically, the most substantial growth occurred in middle-income clerical, sales, and service jobs. These findings align more closely with the theory of professionalisation rather than the theory of social polarisation, which would have expected more growth in high- and low-income jobs while showing limited growth in middle-income jobs.

The increasing demand for educated workers and the declining demand for individuals without high school completion contributed to the rising unemployment rate.

This study on employment trends in greater Johannesburg significantly contributes to our understanding of post-industrial labour market inequality and its underlying causes.

Firstly, it reinforces the research findings conducted in other deindustrialising cities worldwide, including Hong Kong, Shanghai, Sydney, Cape Town, London, and New York. These results suggest that urban inequality manifests as a workforce characterised by increasing qualifications and higher pay, alongside unemployment among low-skilled workers, instead of a big gap between a growing number of highly paid and low-paid workers.

Also read: Post Office fails to pay into employees’ retirement fund for three years – Raising concerns

Secondly, the main reasons for these changes in the labour market were not only deindustrialisation, in-migration of low-skilled workers, or the absence of unemployment benefits. Instead, increased automation across economic sectors and the consequent demand from employers for non-manual and more educated workers played significant roles.

This comprehensive study challenges existing narratives and provides valuable insights into the complex dynamics of employment patterns in Johannesburg. As global cities grapple with inequality issues, understanding the underlying factors shaping their labour markets becomes crucial in developing effective policies and interventions.

This blog series, curated by David Satterthwaite, explores various facets of global urban change and aims to develop a deeper understanding of urban inequality’s complexities.

Note: The employment estimates for 1970 and 2011 are subject to a standard error, ranging from 1,293 to 6,641. The estimate of employment change between 1970 and 2011 is subject to a standard error ranging from 6,583 to 7,621.

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Strict new BEE laws could result in 600,000 job losses – DA

Picture:  Unsplash / Thomas Bennie