SETP No. 14 The Economic Value of Incremental Employment in the ...

7.9 Table 7.3 estimates the cost of earthwork excavation using labour-based
techniques under varying soil conditions (and hence productivity levels), different
wage rates, supervision and tool costs. The table is arranged so that low wages
are coupled with low supervision and tool costs while higher wages are coupled
with higher supervision costs. This is done to allow us to estimate possible
highest and lowest costs, not because of any assumed relationship.
Table 7-3
The Cost of Earthwork Excavation using labour based methods
Varying costs and ground conditions
Assumptions
Costs
Rands
Daily wage 1 25 33 50
Daily cost of supervision per 20 workers 2 40 50 76
Monthly cost of tools per worker 3 10 25 50
Labour productivity M3 per day 4
Soft Ground 5.0 5.0 5.0
Normal Ground 3.0 3.0 3.0
Hard Ground 1.5 1.5 1.5
Estimated cost per M3 of earthwork excavation
Rands
Soft Ground 5.5 7.3 11.2
Normal Ground 9.2 12.2 18.7
Hard Ground 18.3 24.4 37.4
Notes: 1. More than half the public works projects in the Western Cape paid daily wages between R20 and R30
as determined as part of the SALDRU (1999) study. Unpublished data.. R33.20 is the minumum
statutory wage for civil engineering in Northern Province (based on an 8 hour day)
2. Taylor & Bekabye 1999 p14 indicate that supervision of labour based projects in Uganda costs 3.4% of project
budget. At the same time labour cost 44.4% of project budger. Hence supevision was 7.6% of labour cost.
At R25 per day this translates into R38 per day, at R33 this equals R50 supervision and at R50 wage R76.
3. Guestimate
4. Average productivity rates as determined by McCutcheon (1991) and
Namibia, Ministry of Works, Transport and Communication (2000) vol. 2
Table E.8 (draft report)
7.10 Three different daily wages were chosen – a social minimum, a statutory
minimum and an urban/peri-urban wage. SALDRU recently completed an
investigation into public works programmes in the Western Cape (SALDRU
1999). Unpublished data on wages from the SALDRU study has been released
for the purposes of this investigation. SALDRU investigated 101 projects. Of
these eleven paid R15 or less per day; thirty five paid between R16 and R29 and
thirty three paid R30 a day. In other words, over 78% of public works projects
investigated in the Western Cape paid daily wages of R 30 or less. The statutory
minimum wage chose here is for the Northern Province.
• Under good soil conditions where construction labour earns R25 a day
and there are low supervision and tool costs, it costs R5.6m 3 for earthwork
excavation. As the wage rate and other costs increases so the cost of
moving soil increases to R7.6 m 3 with a wage of R33 a day and R11.5 m 3
for a daily wage of R50 and high supervision and tool costs.
• Under normal working condition – daily wages of R33 result in costs of
moving soil of R9.3m 3 . With higher wages and associated costs the
extraction costs increase to R12.7m 3 and R19.1 m 3 respectively.
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