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South Africa Economic Update : jobs and inequality (English)

This report reviews South Africa’s recent economic and social developments. It underlines that South Africa’s current economic rebound may not be sustained if the fundamental factors undermining its growth potential are not boldly addressed. This includes in particular income inequality, which fuels resource contestation, policy uncertainty and scare private investors of seeing their investments overly taxed and expropriated. Nevertheless, inequalities are increasingly driven by labor markets developments, as opposed to race or location of origin. Policy actions could accelerate a projected decline in inequalities resulting from greater access to education. Using a dynamic computable general equilibrium, the report simulates a number of policy scenarios until 2030. Simulation results suggests that continuing to address corruption, restoring policy certainty in mining, improving the competitiveness of strategic state-owned enterprises, further exposing South Africa’s large conglomerates to foreign competition, and facilitating skilled immigration would raise labor demand and create the fiscal space needed to eventually build labor supply from the poor population through education and spatial integration reforms. By 2030, extreme poverty could be almost eradicated and inequalities significantly reduced. And as inequalities decline, the social contract would strengthen and likely encourage further private investment – a possibility not captured in the simulations.


  • Author

    Dessus,Sebastien C., Hanusch,Marek

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  • Document Type

    Working Paper

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  • Country

    South Africa,

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  • Doc Name

    South Africa Economic Update : jobs and inequality

  • Keywords

    real rate of interest; Goods and Service Tax; Poverty and Inequalitys Assessment; small and medium size enterprise; top income tax rate; contingent liability; contingent liabilities; export of goods; import of goods; rate of inflation; commodity price forecast; advanced economy; Manufacturing; foreign direct investment; per capita term; boost to growth; Boosting Growth; international oil price; growth in agriculture; net job loss; regional value chain; real sector; global interest rates; trade and investment; global financial crisis; saving investment gap; demand for coal; commodity price support; investments in agriculture; emerging market economy; stock market index; high growth rate; labor market development; higher interest rate; global value chain; national government financing; private consumption expenditure; south african rand; purchasing power parity; government consumption expenditure; adjustments for inflation; business confidence index; corporate tax revenue; global economic prospect; public investment spending; loose monetary policy; consumer price inflation; official unemployment rate; determinants of poverty; youth unemployment rate; global economic recovery; improved living standard; demand for metals; global economic expansion; global equity market; Real estate; global growth; Mining; young people; business service; private investment; global economy; industrial production; policy uncertainty; labor demand; export orders; fiscal redistribution; Exchange Rates; bond yield; political right; fiscal revenue; domestic output; global demand; monetary condition; supply side; goods trade; credit growth; global supply; borrowing cost; construction sector; portfolio flow; financial market; natural rate; bond spread; capital flow; long-term yield; higher growth; social assistance; skilled labor; public debt; national account; fiscal space; investor confidence; baseline scenario; debt stabilization; tax avoidance; primary sector; social contract; domestic saving; equity index; domestic shock; budget deficit; global composite; government service; global market; high spending; free education; corporate bond; risk premium; fixed investment; income bracket; international market; infrastructure grant; income ratio; capital asset; international bond; mutual fund; market demand; global experience; peer-to-peer learning; downside risk; cyclical upturn; export growth; severe drought; job status; wage inequality; commodity exporter; Fiscal Stimulus; wage growth; poverty projection; comparative advantage; budget expenditure; income inequality; estate duty; higher deficit; participation rate; tax measure; age category; government security; formal sector; informal employment; luxury good; labor participation; skilled employment; informal sector; tax collection; Employment Sector; job sector; bond fund; rising inflation; agricultural employment; residential investment; unskilled job; drought relief; employment growth; vertical line; transport equipment; additional revenue; capital outflow; market confidence; job center; ad valorem; excise duty; emission tax; good governance; world economy; income policy; hourly earnings; agricultural price; eradicating poverty; retail sale; reducing inequality; national income; financial stress; poor household; fiscal consolidation; inflation expectation; foreign liability; commodity boom; policy scenario; financial boom; oil production; inequality measurement; public intervention; transfer service; household spending; consumer sentiment; global trade; business cycle; global trend; binding constraint; poverty alleviation; inequality reduction; emerging country; sector activity; manufacturing export; trade restriction; raw material; Basic Education; investment growth; mining production; Income policies; commodity policy; price movement; large conglomerate; foreign competition; skilled immigration; anecdotal evidence; informal settlement; extreme poverty; investment need; Job Creation; inclusive growth



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Dessus,Sebastien C. Hanusch,Marek

South Africa Economic Update : jobs and inequality (English). South Africa Economic Update,no. 11 Washington, D.C. : World Bank Group.