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Power cuts have hit South Africa’s labour market hard: the biggest toll has been on jobs – new research


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Access to electricity – measured by the share of individuals who use electricity as their main energy source – has significantly improved in lower-income countries in recent decades. Thanks to large-scale rural electrification and infrastructure development programmes, 90% of the population in these countries had access by 2021, up from about 74% at the turn of the century.

 

In many of these countries, however, electricity supply is often unreliable. Generating capacity is inadequate, there’s not enough investment in infrastructure, and energy prices are high. Consequently, outages are frequent and long-lasting. By forcing households and firms to use alternatives, such as diesel generators and back-up batteries, these outages raise the costs of energy, thus limiting the benefits of access. Those costs come in the form of direct expenses for households and firms and broader social impacts.

 

Power outages have long been identified as a major constraint to economic development. Many studies document their negative effects on economic growth, firm productivity and sales. It is unsurprising then that people are willing to pay a relatively large amount for reliable power.

Because of those negative effects, it’s likely that outages have an impact on the labour market too. This is of particular interest in high-unemployment contexts, like South Africa, where creating decent jobs is key to alleviating poverty. However, evidence on these effects is scarce.

 

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