Sectoral reallocation employment reallocation in SA

Today’s post by Gabriella Neilon shows that South Africa’s labour market is unusual for its lack of dynamism. South African industries have experienced much less structural change than in major economies. Expansion and contraction of industries in South Africa is low, varying between 1% and 2.5% since 2018. In the UK, for example, annual sectoral reallocation over the same period varied between 7% and 17%, depending on how industries are measured. This suggests low transitioning of workers between industries in South Africa and low levels of structural adaptation. This suggests that structural rigidities play a more important role in the labour market than factors such as technological changes.

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