The Employment Equity Act and racial inequality in South Africa : evidence from the top management level in the private sector

Abstract : Despite South Africa’s most liberal and progressive constitution, issues of racial wage gap (especially at the top management level in the private sector) are still very much with us. The government introduced the Employment Equity Act (EEA) to address racial imbalances perceived to be the consequence of the apartheid regime, and to promote equal opportunity and fair treatment in employment (Employment Equity Act 19 no 55 1998). However, there is a public debate in South Africa on whether the earning distribution among the white and African race groups in the labour force improved after the enforcement of the EEA. This research contributes to this debate by attempting to investigate whether the EEA is doing enough to address racial wage gaps in the South African labour market. It uses Post-Apartheid Labour Market Services (PALMS) data, which exploits the sample surveys conducted by Statistics South Africa. Under the October Household Survey (OHS) release data range from 1994 to 1999 and the Quarterly Labour Force Survey (QLFS) latest release data from 2008 to 2017. This research employs the Blinder-Oaxaca decomposition approach to decompose the wage gap between different population groups for the period 1997 and 2015. The Blinder-Oaxaca decomposition results for 2015 indicate that among the white and African sample the means for white workers are larger than those of African workers. Decomposition by occupation separately suggest that the average earnings of white workers still exceed that of African workers, however, the gap is not as big as it was previously.M.Com. (Economics