The problems of low labour market earnings and unemployment are at the forefront of debates about labour market policy in contemporary South Africa. High and rising unemployment rates contribute massively to poverty, but many people also earn little in the labour market because they work for few hours per week or receive low hourly wages, particularly in the informal sector. For individual South Africans, moving between the categories of unemployment, informal sector work and formal employment
usually means big shifts in earnings and well-being. To understand poverty and inequality in South Africa, it is therefore crucially important to examine the patterns and dynamics of shifts (or transitions) between these categories of involvement in the labour market.