Black Economic Empowerment (BEE) in South Africa: introduction and a review of the labour market literature

Abstract

Abstract:Broad-Based Black Economic Empowerment (B-BBEE) was conceived as a structural intervention to fundamentally reorganise the South African economy and address persistent economic inequalities. South Africa has the world's highest income inequality, and this is reflected by vast inequalities in salaries and wages both between high and low earners, but importantly between different race and gender groups. Despite a plethora of legislation aimed at addressing inequality in ownership (such as B-BBEE) and in the workplace (employment equity legislation), women and Black workers in South Africa continue to be paid less than men and white employees, even when doing the same work (the pay gap), and are more likely to work in precarious, low-paid jobs (occupational segregation). These factors are driven by differences in the characteristics of workers, and by structural discrimination in the economy. Conceptually, we can decompose structural discrimination into two forms–that which discriminates against people who do the same job, based on race and gender (the pay gap)– and that which discriminates indirectly by occupational segregation–blacks and women concentrated in low paying occupations. In this paper, we ask whether B-BBEE–while not explicitly a labour market intervention–has had any positive impact in reducing labour market inequalities. We review the literature on occupational segregation and the gender and race pay gaps in post-apartheid South Africa, and examine the various policy interventions, with a particular focus on B-BBEE, that have attempted to address this enduring problem.