Oil shocks lift South African wage expectations before wages
A 40 percent oil price shock raises South African wage expectations immediately, while wage growth responds a quarter later. South African Reserve Bank (SARB) researchers Chloë Allison and Phumlani Mavuma find more persistent responses among unions.
Expectations move before pay
Wage growth rises about 1.5 percentage points two quarters after the shock.
Current-year wage expectations immediately rise 0.53 percentage points for firms, 0.57 for analysts and 0.23 for unions.
Firms peak at 0.65 percentage points after two quarters, analysts at 0.6 after one and unions at 0.52 after two.
One-year-ahead expectations initially rise 0.38 percentage points for firms, 0.14 for analysts and 0.33 for unions.
Firms and analysts peak at 0.5 and 0.42 percentage points after two quarters.
Union responses reach about 0.5 and 0.35 percentage points after five and six quarters, respectively, but are not continuously statistically significant.
Firms' and analysts' responses concentrate in the first three to four quarters.
Contracts delay the adjustment
Quarterly data span Q1 2000 to Q3 2025, using SARB, Statistics South Africa and Bureau for Economic Research surveys.
A five-variable structural model with four lags identifies oil shocks; local projections trace responses over 12 quarters.
Collective bargaining and multi-year agreements can delay pay adjustment.
A 1-percentage-point union expectation shock is associated with 1.3 percentage points higher wage growth after eight quarters.
Checks using levels and controlling for inflation expectations broadly preserve the findings.
The results do not establish causality.
Wages alone arrive late
Realised wages alone are an incomplete gauge of emerging pressure after an oil shock.
Union expectations warrant attention, but their association with later pay growth is not proof of causation.
The authors recommend assessing surveys alongside settlements, inflation and labor market conditions.