Wage effects of unions and industrial councils in South Africa

Using data for 1995, the authors estimate union wage premia of about 20% fo r African workers and 10% for white workers in South Africa-roughly similar to estimates reported for other countries, including the United States. Af rican nonunion workers who were covered by industrial council agreements re ceived a premium of 6-10%; the premium was positive but not statistically s ignificant for whites. Although the union/nonunion wage gap was smaller ins ide the industrial council system than outside it for Africans, the total u nion premium for union members covered by an industrial council agreement w as similar to the union premium outside the industrial council system. Amon g Africans, the industrial council and union wage gaps were largest among l ow-wage workers. These findings, the authors conclude, do not support the c ommon claim that a high union wage premium and the industrial council syste m are the primary causes of high unemployment in the South African labor ma rket.