The Conversation writes that 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. Because of those negative effects, it is likely that outages have an impact on the labour market too.

This is of particular interest in high-unemployment contexts, like SA. Professor Haroon Bhorat and Timothy Köhler of the UCT Development Policy Research Unit analysed the labour market effects of scheduled electricity outages in South Africa – referred to as load shedding – in a recently released paper. They found that power outages have had negative effects on employment, as well as working hours and monthly earnings among those who remained employed. Effects on employment have been larger than effects on working hours or earnings, which highlights the threat that load shedding poses to job preservation and job creation efforts. These effects were not, however, the same for all firms. Workers in the energy-intensive manufacturing industry appear particularly vulnerable to losing their jobs. Also, small and large firms responded differently. Small firms tended to favour reducing working hours rather than introducing layoffs. Lastly, effects varied by load shedding intensity. Low levels of load shedding don’t affect the labour market strongly, but high levels did. These results highlight the negative effects of load shedding on the real economy. From a policymaking perspective, the primary goal of course must be to reduce the frequency and intensity of the outages, and ultimately eliminate them. Longer-term policy decisions revolve around moving faster towards renewable energy sources, encouraging private investment and, overall, building a more resilient and sustainable energy system.

• Read the full original of the report in the above regard by Haroon Bhorat and Timothy Köhler at The Conversation

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