
Context
South Africa remains one of the most unequal countries in the world. The country’s high-income inequality is driven primarily by extreme differentials in the labour market, where over 30% of the labour force is unemployed and earns zero income (Leibbrandt et al., 2010; StatsSA, 2024). Reducing unemployment is therefore at the heart of South Africa’s social and economic challenges, and is key to lower the level of inequality.
Coal is an important industry in South Africa and is central in the just transition. Rough estimates of total employment in the coal value chain alone are close to 200,000 – roughly 1.2% of total employment – while the contribution to output sits at 5.4% of growth domestic product (Makgetla et al., 2021). Moreover, the coal industry is highly geographically concentrated and underpins a large share of local and regional economic activity in certain areas, particularly localities within the Mpumalanga province.
In this regard, the potential negative employment impacts of a transition away from coal, and toward low carbon energy production, presents a significant socio-economic challenge for a country still dealing with the vestiges of apartheid. It is thus critical that the risks associated with these potential adverse employment effects are managed to ensure that inequality is not worsened by an unplanned transition.
This project is part of the Extension of the EU-AFD Research Facility on Inequalities. Coordinated by AFD and financed by the European Commission, the Extension of the Facility will contribute to the development of public policies aimed at reducing inequalities in four countries: South Africa, Mexico, Colombia and Indonesia over the period 2021-2025.
This work is also part of AFD's dialogue with the South African authorities on the just transition and the identification of reforms to be implemented to ensure an inclusive transition.
Goal
There is currently a limited understanding of how many workers are likely to be affected by a transition away from coal; how these workers vary by age, skill, or income level; what an effective social protection policy package for such workers would involve; how much a given basket of policies is likely to cost; and the financing options available. Yet, these are crucial elements in designing and implementing policies that limit the negative social and economic effects of transition and prevent potential increases in unemployment and inequality.
This project aims to make two primary high-level contributions:
- First, it will count and profile existing workers in coal and related industries using reliable, spatially sensitive microdata. This includes an analysis of employment, wages, and wage inequality;
- Second, it will propose a basket of social protection policies tailored to the identified worker profiles, with attendant modelled cost estimates, and potential financing options. This includes a focus on the wage inequality implications of various policy scenarios that highlight the importance of a just transition in South Africa.
Method
The research project has four main components that will encompass the following analytical areas:
- The utilisation of tax data to accurately identify at-risk employees in coal mining, coal-based electricity generation, and coal-adjacent industries, locating them spatially across the country
This will provide a reliable estimate of the number of direct and indirect coal industry workers at risk of being adversely affected in a shift away from coal.
- The production of detailed gender, age, and earnings profiles of the identified at-risk workers in the sector
This exercise is anchored around worker earnings and will be used to identify sub-groups, or cohorts, of workers who will require different forms of protection and support based on their existing skills, earnings, and age profile. The earnings data will in addition be utilised to examine inequality dynamics within the coal value chain and between coal value chain workers and those employed in mining generally and in the formal economy as a whole.
- Using these worker profiles to provide a framework of suitable policy options for the different cohorts in order to develop a comprehensive social protection response
Policy options would include individually assigned combinations of interventions such as early retirement packages, grants, and skills development. Furthermore, the study will provide a comprehensive overview of the various social protection policies available in South Africa and determine whether they could apply to affected workers.
- Examination of scenarios for declining coal employment and model a series of associate cost estimates for the various policy response options
This includes modelling possible policy scenarios over the full-time horizon of existing employees. The result is a costed picture of the implications of the just transition policy for South Africa’s coal sector, that includes a discussion of potential public finance options. The findings will also shed light on potential inequality outcomes to emerge from different just transition policy scenarios.
Results
You will find below the different research papers related to this project:
In progress
Contact:
- Anda David, research officer at AFD and scientific coordinator of the Facility

Contexte
With one of the highest youth unemployment rates in the world, South Africa’s planning for a just transition needs to take into account the vulnerabilities of its youth cohorts, especially those that can be qualified as “not in education, employment or training” (NEET). For example, a recent study conducted in the framework of the EU-AFD Research Facility on Inequalities revealed that the Mpumalanga province, the region with the highest exposure to the coal exit, has had a NEET youth rate of over 37% for the past decade, with almost three-quarters of them living in income-poor households.
Since 2019, the National Business Initiative (NBI) has been spearheading a multi-faceted and multi-sector partnership, which focuses on expanding and growing pathways for young people to access Installation, Repair and Maintenance (IRM) occupations. The IRM initiative is strategically aligned to various initiatives of the government to drive inclusive recovery and revitalisation of the economy, particularly in the aftermath of the Covid-19 pandemic. It has subsequently been incorporated as part of the Presidential Youth Employment Intervention (PYEI). The Initiative works on the premise that, by supporting township-based IRM entrepreneurs to strengthen and grow their businesses, and by linking them to localised market opportunities, there will be a concomitant increase in the demand for skilled labour, which could lead to the creation of employment opportunities. Therefore, it is a direct response to the youth unemployment challenge.
Collaborating closely with the NBI, the Centre of Researching Education and Labor (REAL Centre) contributed its expertise to the comprehensive analysis of the four key regions identified in Phase 1 of the IRM skills ecosystem mapping project: Atlantis (Western Cape), Mandeni (KwaZulu-Natal), Mamelodi (Gauteng), and Kathorus (Gauteng). Building upon the success of this initial phase, the REAL Centre will now expand the project's scope to the Nkangala district municipality, which is one of the three districts of Mpumalanga province.
This project is part of the Extension of the EU-AFD Research Facility on Inequalities. Coordinated by AFD and financed by the European Commission, the Extension of the Facility will contribute to the development of public policies aimed at reducing inequalities in four countries: South Africa, Mexico, Colombia and Indonesia over the period 2021-2025.
This work is also part of AFD's dialogue with the South African authorities on the just transition and the reduction of inequalities.
Objectif
This research project will conduct a detailed analysis of the skills ecosystem that could feed into the various initiatives to support local authorities and communities in the Nkangala district, which concentrates the coal-fired power plants that will be closed as a result of just transition policies.
Phase 1 of the project revealed that an IRM skills ecosystem mapping project is crucial for addressing inequality by thoroughly analysing the socioeconomic and demographic profiles of diverse townships in South Africa.
By identifying specific skill gaps and understanding the challenges faced by Small, Medium, and Micro Enterprises (SMMEs) in these areas, the study can inform targeted interventions aimed at reducing inequality in access to employment and economic opportunities.
Furthermore, by examining the role of Technical and Vocational Education and Training (TVET) institutions and conducting a comprehensive literature review, the study ensures that proposed interventions are evidence-based and tailored to the needs of the communities studied.
Ultimately, the study's approach of generating actionable insights in collaboration with stakeholders aims to drive meaningful impact and promote inclusive economic development in underserved regions, contributing to efforts to reduce inequality, to advance the principles of just transition and to foster a more inclusive society.
Méthode
Building on Phase 1 of the IRM skills ecosystem mapping, researchers will apply the following method:
- They will set the context for the Nkangala district through desktop research and a few selected key informant interviews;
- They will collect primary data and set up fieldwork through stakeholder mapping workshops and key informant interviews to collect data;
- They will then provide an initial narrative on the overarching local skills ecosystem from the site mapping exercise and will draw on the document review and contextual work on the Nkangala district. Drawing on Spours’ (2019) work on ecosystems, they will use three core elements: the dimensions of verticalities, horizontalities and mediation to understand and analyse the skills ecosystem Nkangala district and to guide the cross-site analysis, building on the work undertaken during Phase 1.
Résultats
You will find below the different research papers related to this project:
In progress
Contact:
- Anda David, Research Officer, AFD