Labour force withdrawal of the elderly in South Africa

This paper provides a broad overview of the labor force activity of older workers in South Africa. It begins with a discussion of important features of the social and economic environment that provide a background for the analysis. Drawing on microdata, it analyses the age profile of participation, focusing in particular on the possible effects of the old age pension on retirement. The authors look at several important variables that may affect the economic activity of the elderly, including marital status, living arrangements, the pension system, education, and geography.

Older workers in South Africa face an increasingly competitive labour market characterised by high unemployment, with limited opportunities for those with poor education and training. They often live in large extended households in which their own resources may be an important source of economic support. The pension provides an important source of support, without necessarily competing with work.

The paper reviews the South Africa pension programme, and shows that state old age pension is the key plank of South Africa’s social safety net, that these pensions are well targeted at the poor and, because of the large number of three-generation and skip-generation households in South Africa, this includes many poor children. In addition, it seems that many of the unemployed survive through their links to related pensioners. [adapted from authors]