W. Arthur Lewis, the founding father of development economics, saw developing economies as dualist, that is, characterised by differences in earnings and productivity between and within economic sectors. His famous model of development, in which ‘surplus’ (unemployed and underemployed) labour was drawn out of subsistence activities and into manufacturing, was reflected in the subsequent East Asian development trajectory in which labour was drawn into low-wage, labour-intensive manufacturing, including in clothing production, before shifting into higher-wage work once the supply of surplus labo ... More

W. Arthur Lewis, the founding father of development economics, saw developing economies as dualist, that is, characterised by differences in earnings and productivity between and within economic sectors. His famous model of development, in which ‘surplus’ (unemployed and underemployed) labour was drawn out of subsistence activities and into manufacturing, was reflected in the subsequent East Asian development trajectory in which labour was drawn into low-wage, labour-intensive manufacturing, including in clothing production, before shifting into higher-wage work once the supply of surplus labour had dried up. This development strategy has become unfashionable, the concern being that in a globalized world, labour-intensive industry promises little more than an impoverishing ‘race to the bottom’. A strong strand in contemporary development discourse favours the promotion of decent work irrespective of whether surplus labour exists or not. We argue that ‘better work’ policies to ensure health and safety, minimum wages and worker representation are important. Decent work fundamentalism—that is, the promotion of higher wages and labour productivity at the cost of lower-wage job destruction—is a utopian vision with dystopic consequences for countries with high open unemployment, including most of Southern Africa. We show, using the South African clothing industry as a case study, that decent work fundamentalism ignores the benefits of dualism (the co-existence of high- and low-wage firms), resulting in the unnecessary destruction of labour-intensive jobs and the bifurcation of society into highly-paid, high-productivity insiders and unemployed outsiders. The South African case has broader relevance because of the growth in surplus labour—including in its extreme form, open unemployment—across a growing number of African countries. Inclusive dualism, as a development strategy, takes the trade-off between wages and employment seriously, prioritizes labour-intensive job creation and facilitates increased productivity where appropriate, so that jobs are created, not destroyed.