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.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.
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. 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.
Second, in a continuous sense to account for differences in load shedding intensity over time, as measured in MW of unmet demand. We adjusted all our models to ensure that the measured impacts were not driven by other factors. These included labour market dynamics during the COVID-19 pandemic period, seasonality, or changes in macroeconomic conditions relating to gross domestic product, the interest rate, exchange rates and investment.We found that load shedding was significantly and negatively associated with employment, working hours and monthly earnings.
We didn’t find any evidence of negative associations for stages 1 and 2 load shedding, but from stage 3 upwards, the impact became evident and grew stronger.