Investigating underemployment in South Africa

Abstract

Labour economists in South Africa have extensively researched on almost all aspects of the unemployment phenomenon, specifically, the levels and extent of unemployment as well as the causes of unemployment have received a lot of empirical attention. One category of the labour force, namely the underemployed, has mostly been ignored in empirical studies. An investigation into the prevalence and rate of underemployment is essential because unemployment alone underestimates the magnitude of a country’s available excess labour capacity. The study focuses on various conceptual and empirical issues, including the definition of underemployment, the extent of underemployment in South Africa, demographic characteristics of the underemployed, an empirical estimation of the total earnings effect of underemployment, the duration of underemployment, and the possible policy options to tackle underemployment. To achieve its research objectives, the study conducts various descriptive and econometric analyses, using the data from the 1995-2016 labour force surveys and the first four waves of NIDS conducted in 2008-2015.