Geographical and industry differences on remuneration gap-enhanced labour productivity levels in a developing economy: South Africa as a case study

Abstract

The aim of the article was to determine the geographic and industry differences for employee-remuneration gap-enhanced labour productivity levels in a developing economy. The Winter-Ebmer and Zweimuller model was used to estimate the signs and magnitudes of the employee-remuneration gap-enhanced labour productivity levels for the different industries in the different geographical areas. The estimation results for all three industries indicated a significant difference between the higher gross geographical product (GGP) provinces and the lower GGP provinces in terms of the employee-remuneration gap-enhanced labour productivity indicator coefficients (ERGLP indicator coefficients). The negative sign of the ERGLP indicator coefficients for the industries of some of the lower GGP provinces relates to the non-existence of any possible positive labour productivity effects that might stem from employee-remuneration gaps. The introduction of business uncertainty resulted in smaller ERGLP indicator coefficients across all industries and geographical areas. The impact was much more severe in the case of the lower GGP provinces