Massively over-paid unskilled workers?

Mike Schussler has crunched some numbers and suggests, very strongly, that SA unskilled labour is vastly overpaid compared to international peers. My recent posts about the cause of structural unemployment in SA have mentioned the supply and demand imbalance of unskilled labour and the downwards rigidity of wages. If Schussler is right and the current wage levels are far too high to be internationally competitive then we have an even larger, even longer term problem to solve.

What Schussler doesn’t look at, which would be telling, is whether there are differences in the costs incurred by workers in SA and, to use an example that he does, India.  Comparing price levels is one thing, but if a typical Indian worker lives 500m from his or her place of work and a typical South African worker lives 15km from his or her place of work, then that is an infrastructure problem that must also be solved before we can be internationally competitive.

Published by David Kirk

The opinions expressed on this site are those of the author and other commenters and are not necessarily those of his employer or any other organisation. David Kirk runs Milliman’s actuarial consulting practice in Africa. He is an actuary and is the creator of New Business Margin on Revenue. He specialises in risk and capital management, regulatory change and insurance strategy . He also has extensive experience in embedded value reporting, insurance-related IFRS and share option valuation.