Dundee Discussion Papers in Economics 136: The evolution of the racial wage hierarchy in post-apartheid South Africa

This paper develops a multilateral decomposition procedure for the analysis of wage differentials and applies this to the evolution of the racial wage hierarchy in South Africa over the period 1993 to 1999 amongst full-time regular employees of normal working age, but excluding those in the primary sector and the defence forces. We find that the transition to democratic rule in 1994 was accompanied by an improvement in the wage position of the majority African workforce relative to all other racial groups, but that these gains were not fully preserved through the latter half of the decade. The persistence of racial wage differences following the repeal of all overt discriminatory laws and regulations points to the need for concerted policy interventions to reverse the legacy of apartheid. We review the range of policy initiatives that have been taken by the South African Government since 1994 in the light of our empirical findings.