Wage premia in South Africa

Workers in the public sector and union members earn substantial wage premia over private sector and non-unionised employees, respectively. The IMF noted in their recent Article IV assessment that the ‘rapid growth in the wage premia is explained by the continuous increase in public-sector pay’. Kerr and Wittenberg (2021) also find that ‘union membership has become increasingly concentrated at the top of the wage distribution and in the public sector’.

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