Wage trends in post-apartheid South Africa: Constructing an earnings series from household survey data

Abstract

Recent research on South African labour-market trends has suggested that workers have, on average, experienced a substantial decrease in their real wage earnings in the post-apartheid era. This paper will show that this claim is based on choosing datasets on either side of Statistics South Africa’s changeover from the October Household Survey (OHS) to the Labour Force Survey (LFS), which caused a discontinuous and inexplicably large drop in average earnings. By using all the household datasets after 1994, one can attempt to identify and address the sources of data inconsistencies across surveys in order to construct a more comparable earnings time series. Taking account of the inconsistencies in questionnaire design and the presence of outliers, it is possible to construct a fairly stable earnings series for formal-sector employees.