The dynamics of employment and poverty in South Africa : an empirical enquiry based on the KwaZulu-Natal income dynamics survey.
This study explores the dynamics of employment and poverty in South Africa. Specifically, it is aimed at understanding, over time, the change in household well-being that occurs as a result of the employment types of household members. Secondly, the study explores the relationship between household worker combination and self employment activities, in other words, what are the odds of a household getting better as a result of income accrued from self-employment activities and how is this linked, if at all, to employment of other members of the household. This study will contribute to the debate on poverty and the labour market and that on the relationship between the formal and informal economies. The study relied on secondary data analysis from the KwaZulu-Natal Income Dynamics Survey. Instead of establishing a poverty line, the entire distribution was ranked on the basis of deciles. Decile transitions were then established with respect to household worker combinations and participation in self-employment activities. The analysis of the data revealed a range of worker types. The dominant household worker combinations have workers in regular employment, casual employment, selfemployment, and the unemployed. The number of people following the self-employment route is generally low despite the substantial number of people who remain unemployed. Seemingly, self-employment is not a desirable destination. The period 1993-1998 saw little variation with respect to household worker type. Though the number of regularly employed workers increased during the same period, there were an equally considerable number of unemployed people. The general trend shows few people assuming regular or formal work employment. This trend could not bring about a significant change in total income decile transition and hence a change in household wellbeing. With respect to self-employment, most activities are associated with households with at least a regularly employed member. In a majority of cases, there is a close association between self-employment and workers in the formal economy. The relationship suggests an intra-household transfer of resources to self-employment initiatives or the fact that households participate in self-employment activities in an effort to supplement income from regular employment that is inadequate to meet household needs. There was little variation in household rank order between the two years. It was therefore increasingly difficult for households to experience a change in income, at least, as expressed by their decile transitions. Households with regularly employed members had a greater chance of improving their decile transition. Income from labour earnings therefore played a substantial role in determining the change in household welfare. Though households engaged in a range of self-employment activities, income from these activities had little impact with respect to decile transitions. Income from selfemployment is therefore inadequate to bring about a meaningful change in total household income. In conclusion, the study notes that household welfare and its improvement is dependant upon the employment types of its members. It therefore calls into question the expectation that the unemployed and those in unstable employment should subsist on their own. Secondly, there is a close linkage between the informal economy (i.e. selfemployment) and the formal economy. In light of the links between the two economies, the analysis of the informal economy as a separate entity needs revision.