Do union workers earn higher wages than nonunion workers in South Africa? (Yes, but less so than previous estimates would suggest.) And do industrial council agreements extend these premia to nonunion workers? (On the surface, yes, but the effects are too small to be the primary reason for South Africa's vast unemployment.)In South Africa unions, which played a crucial role in the country's transition from apartheid, are coming under fire. Some argue that a high union wage premium and the industrial council system are important causes of inflexibility in South Africa's labor market.Butcher and Rouse analyze unions' direct effect on workers' wages (including the time-honored question about whether the union wage gap is real or reflects the fact that workers who are members of unions differ from those who are not) and ask whether there is evidence that industrial council agreements force affected employers to pay union wages for nonunion workers.They estimate that among Africans union members earn about 20 percent more than nonmembers, while among whites union workers earn 10 percent more than nonunion workers.They find that African nonunion workers who are covered by industrial council agreements receive a premium of 6 to 10 percent; the premium is positive but not statistically significant for whites.In addition, the union gap is smaller inside the industrial council system than outside the system for Africans, implying that the total union premium for union members covered by an industrial council agreement is similar to the union premium outside the industrial council system.Among Africans, the industrial council and union wage gaps are greatest among low-wage workers.To increase employment, policies in South Africa should focus on increasing competition among employers within sectors, rather than increasing competition among workers by trying to reduce union power.This paper - a product of Poverty and Human Resources, Development Research Group - is part of a larger effort in the group to understand the impact of labor market policies and institutions on economic performance. The study was funded by the Bank's Research Support Budget under the research project quot;The Impact of Labor Market Policies and Institutions on Economic Performancequot; (RPO 680-96). The authors may be contacted at [email protected] or [email protected].

Using data for 1995, the authors estimate union wage premia of about 20% for African workers and 10% for white workers - roughly similar to estimates reported for other countries, including the United States. African nonunion workers who were covered by industrial council agreements received a premium of 6-10%; the premium was positive but not statistically significant for whites. Although the union/nonunion wage gap was smaller inside the industrial council system than outside it for Africans, the total union premium for union members covered by an industrial council agreement was similar to the union premium outside the industrial council system. Among Africans, the industrial council and union wage gaps were largest among low-wage workers. These findings, the authors conclude, do not support the common claim that a high union wage premium and the industrial council system are important causes of inflexibility in the South African labor market.

This book offers an extensive survey and synthesis of the economic literature on trade unions and collective bargaining and their impact on micro-and macro-economic outcomes. The authors demonstrate the effects of collective bargaining in different country settings and time periods. A comprehensive reference, this book will be of interest to students and scholars of labor policy as well as to policy makers and anyone with an interest in the economic consequences of unionism.

Study of the impact of trade unions on working conditions and labour relations in the USA - based on a comparison of unionized workers and nonunionized workers, examines wage determination, fringe benefits, wage differentials, employment security, labour productivity, etc.; discusses trade union power and incidence of corruption among trade union officers; notes declining rate of trade unionization in the private sector. Graphs and references.

This paper analyzes the determinants of high unemployment in South Africa by studying labor market dynamics using individual level panel data from the Quarterly Labor Force Survey. While prior work experience and gender are found to be important determinants of the job-finding rate, education attainment and race are important determinants of the job-exit rate. Using stock-flow equations, counterfactual exercises are conducted to quantify the role of these different transition rates on unemployment. The paper also explores the contribution of unemployment towards inequality. Reducing unemployment is found to be important for reducing inequality – estimates suggest that a 10 percentage point reduction in unemployment lowers the Gini coefficient by 3 percent. Achieving a similar reduction solely through transfers would require a 40 percent increase in government transfers.