Reza Che Daniels

Skills Shortages in South Africa: A Literature Review

This paper conducts a review of the literature on skills shortages in South Africa. It is demonstrated that different Government departments have different views concerning the definition of skills shortages. This is largely due to the omission in any official government literature of tying the concept of “skills shortages” to productivity. There is also a complex and frequently overlapping institutional architecture that undermines the effective administration of skills development. An important example of this is that the link between providing skills training and accrediting individuals with a qualification that acknowledges this training is very poorly administered, highlighting poor coordination between the Department of Labour and Department of Education. Among Sectoral Education and Training Authorities (SETAs), there is also under-performance on their mandate to provide skills training for the unemployed – an activity that is flagged in this review simply because of the strong public good nature to this activity and the fact that only SETAs are institutionally empowered to effect this change. A variety of policy recommendations are made with respect to both closed- and open-economy solutions to skills shortages. A key point is that immigration legislation must be relaxed in order to help solve the pervasive skills constraints in South Africa.

Financial intermediation, regulation and the formal microcredit sector in South Africa

This article evaluates demand- and supply-side aspects of the formal microcredit sector in South Africa and the environment in which the sector is regulated. Although South Africa has a competitive financial sector relative to a sample of upper middle-income countries, the historical bias towards formal sector banking resulted in a lack of appropriate credit instruments for poorer people. In 1992, new regulations facilitated the legalisation of microfinance institutions and, by 2000, the sector had grown to over 2 per cent of total credit extended by the monetary sector, with over 1 300 institutions supplying microcredit to the public. The article presents the first statistics of different types of microcredit institutions as well as some of their disbursement trends, recorded since 1999 by the Micro Finance Regulatory Council. Thereafter, the demand for credit is assessed between 1995 and 2000, before best-practice regulation and South Africas degree of compliance are discussed.

Wealth data quality in the National Income Dynamics Study Wave 2

This paper examines the quality of data on household assets, liabilities and net worth in the South African National Income Dynamics Study (NIDS) Wave 2. The NIDS is the first nationally representative survey on household wealth in South Africa. The cross-sectionally weighted data are found to be fit for use in terms of the univariate distributions of net worth, assets and liabilities, but population totals are probably underestimated due to the presence of missing wealth data in Phase 2 of Wave 2 that is not taken into account in the weights. When compared with national accounts estimates of household net worth, there is an apparent inversion of the estimated totals of financial assets versus non-financial assets. Further research is required into why this is so. We find that the NIDS wealth module is a suitable instrument for the analysis of household wealth.

Getting ahead or falling behind: Findings from the second wave of the National Income Dynamics Study

The National Income Dynamics Study is the first national panel study of South African individuals. Its objective is to track these individuals over time to study social mobility. This paper documents the survey design and a successful recontact record in Wave 2 before providing an overview of the key findings from the other papers in this issue of the journal. Those from the top of the income distribution were hardest to recontact. The papers show that average real incomes grew slightly between 2008 and 2010. However, life satisfaction and expectations of future upward mobility declined. Being unemployed and moving into unemployment is associated with the lowest level of life satisfaction. Aggregate employment did not decline much but there was significant labour-market churn. The National Income Dynamics Study data reveal high levels of grade repetition and a slow transition from school to work. Relocating is shown to be an important part of schooling and employment decisions.