Bell, Trevor : Unemployment in South Africa

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it is argued that for a small open economy like ours, the export demand for South African traded goods is perfectly elastic at world prices. Thus if production costs are brought down even fractionally relative to other countries we could increase our export sales in foreign marketa to an almost limitless extent. Because our exports are small relative to the imports of, say, the United States, producers in the CIS would not attempt to block importation of our goods Consequently tough anti-inflationary monetary and fiscal policies, devaluations, and wage restraint are called for and must. work. While this may be true in buoyant world economic conditions, under present conditions, which have prevailed for some years now, even quite small countries in effect become big countries". In a world with considerable excess production capacity in manufacturing, any increase in South African exports is likely to provoke a sharp reaction from both United States business firms and from the US authorities, and indeed such a reaction has been forthcoming over several South African exports, notably, but by no means only, steel. Furthermore, it is obviously not possible for all countries to increase their exports and employment levels by cutting their wage ratea and prices or by devaluing their currencies. Thus, in these circumstances, even a one-off shock may give rise to persistently high levels of unemployment. Furthermore, it is clear that an economy may be subjected to repeated shocks all moving the economy in the same downward direction. Thus it may be unable to adjust to any of these unfavourable events before the arrival of the next, even with a system of prices which by historical standards is as flexible and competitive as can be expected. This is what appears to have happened in the OECD countries and in South Africa over the past decade. In this case any conclusions regarding the possibility of long-term rising, involuntary unemployment, based on comparative static analysis, or analysis aaauming short-run cyclical movements only is inadequate. In view of this and a decade of rising unemployment rates, it is 1) See Streeten (1982).
eside the point to argue that theoretically inconceivable in the long-run. involuntary unemployment is (v) There is, thus, no theoretical or empirical reason for thinking that the rising rate of unemployment in South Africa does not reflect a rising rate of involuntary unemployment. In any case, however, it is arguable that the question of whether unemployment is voluntary or involuntary is not of any great significance for our purposes. We consider (a) the question of distinguishing voluntary and involuntary unemployment at a particular point in time, and then (b) the relevance of the distinction in the case of long-term trends. (a) It is clear that in a sense that at any particular point in the some unemployment and underemployment in South Africa, perhaps even a significant part of it, is voluntary. Bromberqer (1978: 18) suggests that amongst the kinds of unemployment which may be regarded as voluntary are some related to cultural factors and he refers particularly to the need to consider the "disutilities and opportunity costs of going out to work from the honelands (at least for some people at some times) and to set against these the very low remuneration available (at least historically) in agriculture and mining"; and to "the system of deferred payment operated by the mining industry which arranges income transfers across time and so finances restinq after a period of work (or social maintenance . . . . . . " 1). It is with this kind of 'voluntary' unemployment that Bell (1972) deals in developing a graphical analysis of the optimal division of the migrant's time between "time in wage employment" and "time spent in the rural home', and which is also the main subject of a paper, dealing specifically with unemployment, by Knight (1981). The 1) Bromberger is careful, however, to mention the need to emphasize the constraints operating on some Black work choices and the peculiar nature of the options available.
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 38 and 39: hetbr th. unemployment in voluntary
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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