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This article explores two contrasting perspectives on the role of informal settlements in urban labour markets. One proposes that they help to lift households out of rural poverty and onto a path to prosperity through affordable access to urban opportunities. The other suggests that the debilitating conditions confine residents to enduring hardship and insecurity. South Africa is an important test case because of the extent of social and spatial inequalities, and the policy ambivalence towards shack settlements. Preliminary evidence indicates that employment rates are much closer to formal urban areas than to rural areas, but conditions of employment are noticeably worse. Other forms of data are required to assess the magnitude and timescale of economic progression for households. [ABSTRACT FROM AUTHOR]

Rapid urbanisation in the South has contributed to the growth of informal housing on a large scale. South Africa’s experience is somewhat unusual in that the growth of informality appears to have taken the form of backyard shacks in established townships rather than free-standing shacks in squatter settlements. This is potentially important for household well-being (e.g. better access to services) and for the efficient functioning of urban areas. The paper develops a framework for assessing the impacts and applies it to the country’s leading metropolitan region, Gauteng. It finds that people are slightly better-off in backyards than in shacks elsewhere, although the wider benefits for urban areas are equivocal. In some respects backyard shacks are a stopgap for poor households desperate for somewhere to live. In other respects they represent a kind of prototype solution to the urban housing crisis. The government could do more to improve basic dwelling conditions and to relieve the extra pressure on local services. [ABSTRACT FROM AUTHOR]