Bell, Trevor : Unemployment in South Africa

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hetbr th. unemployment in voluntary or involuntary, cyclical or ntnuztur.1. natural or unnatural, without recognizing that there has in fact boon a long downswing (whether or not it vill continue into the future1 in the rate of growth of the South African economy, and having aara notion of its causes. For these matters cannot usefully be dimwned airply in tho abntract, if we are bent on understanding the particular concrete cane of South Africa. They are clearly also vital in deciding on the moat appropriate meaaures for dealing with unemploymant in thin country. is) In the light of thm above let us conaider the question, which has benn prdnrnt in the South African debate, whether involuntary -lopant can exiat in the long-term. Some exponents of the nev cknnical nchwl appear to nay that long-run involuntary unemployment ia thwretically imponaible and hence cannot exist in the longrural). Ihua th. renponae to any evidence that the unemployment rat. in riaing necularly tend. to be either that the evidence is flmd (perhpa railacting falling labour market participation raten), or if the riming unemployment trend in accepted, that this mat reflect rising voluntary unemployment. In other words, it is ilplied that any perniatent increase in the unemployment rate must be d m to a rining 'natural' rate of unemployment, the rate of unemploy -t, in effect, which im conniatent with 'full empl~yment'~~. Thin v im on the theoretical impossibility of long-term (as diatinct fra cyclical or trannitionall involuntary unemployment would seem 1) The main exceptioru allowed by them (apart f rm very special cases. involving eluticitien of aupply and demand for labour) would seem to k unqloyment due to intervention in the market by government, trada union. etc. Since they tend implicitly to define involuntary unamployment an unemployment due to the failure of the labour market to clear; for reanonn intrinsic to the market itself (rather than kcaune of government or trade union intervention), however, thin tend. not to ba regarded an involuntary unemployment. 1) It in thua seen an involving a ateady redefinition of the u~lployment rate consintent with full employment.
to call for qualification. Let us say that an economy is subject to a single exogenous shock, in the form of higher energy prices or a sudden burst of intensified competition from foreign producers of mhnufactured goods and that this necessitates substantial structural change. The adjustment to such a single external shock might be exceedingly protracted. It may for instance, ;quire substantial retraining of the labour force; a reallocation of labour among different skill levele (both upwards and - in the case of workers too old or otherwise unfit to be retrained for other skilled jobs - downwards) and among different sectors and regions; a reallocation of investment resources away from industries making intensive use of energy and twards energy producing sectors, and a general alteration of the structure of the stock of productive capital. Also for various good reasons (not simply because of government intervention or the unreasonable stubborness of workers) relative and absolute levels of real wages may be inflexible1 ) . Furthermore, it should be noted that in the middle of a period of prolonged stagnation in the world economy even thoroughgoing competition domestically in a particular national economy will not necessarily ensure movement towards full employment. For contrary to widespread opinion, the price and wage elasticities of demand for goods and labour respectively may be very low even in the case of a small, open economy, in certain world economic conditions. Sometimes 1) For instance it may be necessary for some skilled workers thrown out of their jobs to offer themselves at substantially reduced rates of pay in the unskilled labour market in order for markets to "clear": they may not readily do this and, perhaps rightly. society may not expect them to do so. Also the elasticity of the demand for labour may be so lar, taking into account the adverse effect of general wage cuts on the demand for goods and services, that the new equilibrium wage levels may require a decrease in the real wage bill accruing to workers as a whole. In these circumstances they may be expected to resist wage reductions determinedly (See Solow (1980) on this and other issues pertinent to our discussion).
Page 2 and 3: INSllIUTt TOR SOCIAL AND ECONOMIC R
Page 4 and 5: i CONTENTS Page - u.t of Tabla0 and
Page 6 and 7: Preface This paper is an extension
Page 8 and 9: Applications by whltea for Employme
Page 10 and 11: Simkins. His work is noteworthy par
Page 12 and 13: There is not, to my knowledge, anot
Page 14 and 15: The evidence thus suggests a persis
Page 16 and 17: ~i~~~~ 1: UNEMPLOYMENT PATES: UNITE
Page 18 and 19: Table 5: Unemployment Rates in Scnn
Page 20 and 21: Thue in a number of other countries
Page 22: Table 6 Registered Unemployment Rat
Page 25 and 26: Table 7 Non-Agricultural Employment
Page 28 and 29: In the case of Blacks, employment g
Page 30 and 31: governwant intervention in foreign
Page 32 and 33: Real Intwraat Rats and Rats of Incr
Page 34 and 35: Table 9 Real Interest Rates and Ave
Page 36 and 37: grawth in general rather than to an
Page 40 and 41: it is argued that for a small open
Page 42 and 43: imzlO.ion of this form of voluntary
Page 44 and 45: significance1). However, the findin
Page 46 and 47: Thus where the unemployment rate sh
Page 48 and 49: have expected a substantial increas
Page 50 and 51: vii) Finally, amongst the causes of
Page 52 and 53: traditionally been considerably hig
Page 54 and 55: already become much more difficult
Page 56 and 57: unemployment is deregulated markets
Page 58 and 59: 'thirties and even the postvar peri
Page 60: might, JB (1982) "The Nature of Une

Bell, Trevor : Unemployment in South Africa

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