Answer to Question #228348 in Microeconomics for Love

Question

Wage inequality and globalisation: Has the move towards a more integrated South

African economy brought with it greater demand and supply mismatches

▪ How does globalisations affect the demand for high and low skilled workers across the

globe?

▪ Given that much of South Africa’s economic activity is based on the natural resources, do

you think the country is ready to make the shift to a more technologically driven production

process?

▪ As South Africa has a large contingent of unemployed and low skilled workers how do you

see the integration process affecting the mismatch between the demand and supply

▪ Apart from the mismatches of supply and demand in the labour market, what other factors

are largely contributing to inequality levels within the country?

Answer 1

(a)

The demand for high skilled workers has increased due to globalization. This is because globalization has resulted in an increase in the manufacturing productivity and this has made a shift from low skilled to high skilled workers.

Hence, the demand for low skilled workers has been reduced whereas the demand for high skilled workers has greatly increased.

(b)

The South African nation is ready to make the shift to a more technologically driven process of production. This is because, in order to utilize the available natural resources maximumly, more advanced technologies have to be employed.

South Africa being a regional leader in deployment of several emerging technologies which help in keeping it at the innovative edge, and also having digital transparency measures, is capable of handling the production process technologically.

(c)

Due to a large contingent of unemployed and low skilled workers, this implies that the demand for workers in the labor market is low because the rate of unemployment is high.

On the other hand, the supply in the goods market is low. This is due to low rate of production that is as a result of less experienced and low skilled labor force that employ outdated methods of production. Workers are also not being employed in the labor market and thus the few who are at work are not able to fully utilize the available resources in maximizing the level of output . This results in less quantity and low quality of output.

(d)

• Inaccessibility to quality education by some of the citizens.
• High levels of unemployment
• Low levels of technology.