This paper investigates the effects of tariff liberalisation on services sector employment over the period 1996 to 2011 in South Africa. This period corresponds with substantial reductions in tariff protection, low employment growth and declines in the manufacturing share of total employment. Following a local labour market approach, we empirically examine whether reductions in employment-weighted tariffs at the municipality-level led to structural shifts in employment from manufacturing to services, and whether these shifts differ by gender or race. The paper draws on a database comprising of 234 municipalities that is constructed using South African Population Census data for 1996, 2001 and 2011. Consistent with theoretical expectations, the paper illustrates that tariff liberalisation was associated with strong increases in the services to manufacturing employment ratio, but this shift was not driven by the absorption of employment in the services sector. Employment in the services sector also fell in regions experiencing relatively large tariff reductions. We demonstrate that the decline in services employment was driven by lower derived demand, income, and infrastructure investment linked to the decline in manufacturing from tariff reductions. Finally, we show distinct differences in the impact of tariff liberalisation across gender and race. We find evidence of tariff-induced structural reallocation towards services that is more pronounced among Black women while negative tariff effects on services employment is found among Black men and White women. Overall, we show that that spillover effects from the decline in manufacturing diminished the absorption of labour by the services sector, thus exacerbating the regional employment impact associated with tariff liberalisation.