Day labouring in Southern Africa after the globeconomic and financial crisis: The case of Pretoria and Windhoek

Abstract

Orientation: The global economic and financial crisis (GEFC) represented a large asymmetric shock, impacting on informal economic activity (for example day labouring) in Southern African countries such as Namibia and South Africa. Research purpose: The aim was to compare pre-and post-GEFC labour market outcomes of day labourers in Windhoek (Namibia) and Pretoria (South Africa). Motivation for the study: Evidence of the micro-economic impact of exogenous shocks on informal labour markets is scarce, despite the informal sector often enduring most of the impact of such shocks. Research approach/design and method: A comparative case study using a mixed-method design was used to conduct fieldwork in Pretoria in 2015 and Windhoek in 2017. Results were compared with data obtained prior to the GEFC. Main findings: Real earnings of day labourers in Pretoria and Windhoek have stagnated since the GEFC. Infrequent levels of employment renders ‘bad months’ as the reality for most day labourers – leaving day labourers structurally more vulnerable than before the GEFC. Practical/managerial implications: The results question the theoretical shock absorber function often ascribed to the informal sector in time of financial strife. Governments are urged to rethink the depth and level of support afforded to the informal sector in such times. Contribution/value-add: This study enhances the understanding of the structural vulnerability of the informally wage-employed in Southern Africa. Furthermore, it provides initial signs of the possible presence of long-term hysteresis unemployment within the informal labour markets as a result of a shock such as the GEFC. Since the turn of the century until the global economic and financial crisis (GEFC), a number of countries in the Southern African Development Community (SADC) region had made notable headway in stimulating economic growth and achieving economic stability (Chipeta 2011). The economic growth rate of South Africa averaged more than 6% over the 5 years before the advent of the crisis. Arguably the strongest economy in the region, South Africa, reached a peak in the business cycle in November 2007 after a 99-month upswing (Venter 2009). This upswing yielded an average growth rate in real gross domestic product (GDP) of 3% between 1995 and 2005 (Venter 2009). In a number of countries, inflation decreased to single-digit levels (before the food and fuel price increases of 2008) and reserves had been built up as well (Chipeta 2011).