SOUTH AFRICAN MINE WAGES IN THE SEVENTIES AND THEIR EFFECTS ON LESOTHO"S ECONOMY

The economic impacts of such a reversal were severe, particularly in Lesotho, South Africa"s prime source of migrant labor. This paper quantifies the more important of these impacts in order to identify the causes of major economic developments in Lesotho and to suggest the magnitude of economic difficulties that may occur if migration opportunities continue to diminish. The first section analyzes selected characteristics of Basotho migration for the period 1921-79. Possibly the most significant of these traits is that the male labor force available for agricultural employment in Lesotho is now at record levels, a situation worsened by the return of Basotho from South African mines. A detailed analysis is given of the magnitude of the shift in wages during the 1970"s, which peaked in 1976 at levels 3-4 times higher than ever recorded. Selected impacts on Lesotho"s national economy are analyzed with major conclusions being that migrant wages have severely distorted Lesotho"s balance of trade; have contributed to increases in government revenues through the Customs Union; and have resulted in an almost 1: 1 correspondence between increased income and imports. Impacts of these economic trends on livestock and agricultural production, consumption, and trade are discussed and figures are presented showing that mine wage increases caused net imports of nearly 100,000 animals annually and the abandonment of cultivation on some 50-60,000 ha. The final section suggests possible trends during the third Five Year Plan period. These include a significant decline in per capita wages, the need to offset negative growth rates in remittances with higher than normal domestic growth rates, and the possibility that a new incentive situation will gradually develop for household/farm decisionmakers. A 15-item reference list (1963-81) and the titles of other LASA research reports issued to date by the Lesotho Agricultural Sector Analysis Project are appended.