The labour market effects of South Africa’s electricity crisis

Over the past two decades, access to electricity in South Africa grew substantially, reaching near-universal coverage. But as access expanded, the reliability of that supply declined sharply, and new research shows these effects reach deep into South Africa’s labour market. South Africa’s electricity crisis centres on load shedding, scheduled, rotating power outages used when electricity supply is insufficient to meet demand, deployed to protect the grid from collapse. The practice began in late 2007 and has intensified since. In 2023, planned electricity cuts averaged over 4,000 megawatts per day, making 2023 the worst year of load shedding on record, equivalent to several hours of blackouts for many households and businesses. The negative effects of power outages on employment first register at Stage 3 load shedding and worsen with severity At Stage 6, employment probability drops by 2.2 percentage points compared to periods with no load shedding, consistent with a potential loss of ~420,000 jobs under a causal interpretation Workers in small firms are most vulnerable: employment declines only in small firms, and working hours fall more sharply (~1.8% vs ~1.1%) Wholesale and retail trade and private household sectors show the most pronounced employment effects; most sectors see reduced working hours Cape Town’s outage mitigation policy increased employment by 3.7% (~56,000 jobs) and working hours by ~2%, showing mitigation is effective