Salary disparities in South Africa: an analysis on race and gender in the Labour Market

Master Thesis


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One of the most definitive identifiers of socio-economic status within modern society is a person's salary. In South Africa, labour market income is the largest source of household income when compared to other income sources namely social grants, remittances, income from a business, and pensions (Stats SA, 2019). Labour income is thus the primary source of an individual's sustenance. It determines the lifestyle they can afford and ultimately also conveys their sense of worth to their employer organization and to society at large. Consequently, employees want to be compensated fairly in exchange for their employment contributions. They want to know that they are being paid well relative to others tasked with the same work and with the same level of experience and qualification irrespective of their gender and/or race. Through a quantitative approach with an explanatory research design using regression techniques, salary disparities by race and gender have been analysed in this study using the LMDSA 2018 data. The analyses of earnings distributed across race and gender revealed that females consistently across all racial groups earn less than their male counterparts. The regression results showed that females overall earn 14% less than males and amongst the four prominent racial groups in South Africa, Blacks earn the least followed by Indians, then Coloureds and Whites earning the most (23% more than Blacks). This puts Black females at the bottom of the labour earnings hierarchy and White males at the top. From this study, salary disparities based on race and gender can be seen very distinctly in South Africa's labour market. The reasons for these disparities are at the very least multidimensional, however the most prominent of these reasons is Education. Education is multifaceted because not only is the level of education completed by employees a cause of the salary disparities but the variance in quality of education received by employees. The variance in quality of education is distinguished by race in this country which at its root cause lies the history of apartheid, and consequently, the quality of education will have an adverse effect on the level of education completed. Income inequality is but one element to many moving parts which contribute to overall inequality in South Africa. Another element is unemployment, and another is the accessibility of quality education. With Blacks being on the lower end of the spectrum in terms of labour earnings, having the highest levels of unemployment amongst all other racial groups and again being on the lowest end of the spectrum in terms of access to quality education and the level of education completed, it comes 3 as no surprise that Blacks are the poorest in South African society and that overall inequality is steadily rising. We conclude this study by providing recommendations for future studies based on the limitations we encountered as well as policy recommendations to address the high levels of income inequality proven to be prevalent in South African labour market. These include revised HR practices, a rebalance to the tax system and an amendment to the BBBEE scorecard criteria.