South Africa Economic Update, No. 11 : Jobs and Inequality
This report reviews South Africa’s recent economic and social developments. It underlines that South Africa’s current economic rebound may not be sustained if the fundamental factors undermining its growth potential are not boldly addressed. This i...
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| Format: | Report |
| Language: | English |
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World Bank, Pretoria
2018
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| Online Access: | http://documents.worldbank.org/curated/en/368961522944196494/South-Africa-Economic-Update-jobs-and-inequality http://hdl.handle.net/10986/29677 |
| Summary: | This report reviews South Africa’s
recent economic and social developments. It underlines that
South Africa’s current economic rebound may not be sustained
if the fundamental factors undermining its growth potential
are not boldly addressed. This includes in particular income
inequality, which fuels resource contestation, policy
uncertainty and scare private investors of seeing their
investments overly taxed and expropriated. Nevertheless,
inequalities are increasingly driven by labor markets
developments, as opposed to race or location of origin.
Policy actions could accelerate a projected decline in
inequalities resulting from greater access to education.
Using a dynamic computable general equilibrium, the report
simulates a number of policy scenarios until 2030.
Simulation results suggests that continuing to address
corruption, restoring policy certainty in mining, improving
the competitiveness of strategic state-owned enterprises,
further exposing South Africa’s large conglomerates to
foreign competition, and facilitating skilled immigration
would raise labor demand and create the fiscal space needed
to eventually build labor supply from the poor population
through education and spatial integration reforms. By 2030,
extreme poverty could be almost eradicated and inequalities
significantly reduced. And as inequalities decline, the
social contract would strengthen and likely encourage
further private investment – a possibility not captured in
the simulations. |
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