UNRISD
United Nations Research Institute for Social Development
Workshop on ‘Poverty Reduction and Policy Regimes’
Public Policy and Poverty
Reduction in South Africa
Jeremy Seekings
Centre for Social Science Research,
University of Cape Town
February 2007
The distributional regime
Growth strategy
External context
Growth path
Policies affecting
employment and
wages
Redistribution
through the budget
Outcome:
Who gets what
The distributional regime
Policies affecting
employment and
wages
Centralised collective
bargaining; pro-union
labour regulations; high
non-wage costs of
employment
High wages (for insiders)
but little or no
employment creation
Who gets what? (i.e. the
distributional outcome)
Good for insiders/organised labour
The distributional regime (continued)
Growth strategy
External context
High wage, skill-intensive in an
open economy
Growth path:
skill-intensive
Policies affecting
employment and
wages
Who gets what?
Good for capitalists and
organised labour
Labour productivity
240
Ireland
220
European
Union
200
180
Middleincome
countries
South
Africa
160
140
120
100
1980
1985
1990
1995
Employment
150
Middle
income
countries
Ireland
140
130
120
European
Union
110
South
Africa
100
90
1980
1985
1990
1995
2000
Growth
paths:
labour
productivity
and
employment,
1980-2000
The distributional regime (continued)
Growth strategy
External context
Growth path
Redistribution
Pro- (deserving) poor
welfare (esp. noncontributory old-age
pensions), tax and social
policies (esp. education
spending)
Policies affecting
employment and
wages
Who gets what:
Some benefits to the
(deserving) poor
Who is poor?
Upper classes:
12% of households
45% of income
Marginal working class:
households headed by
domestic and farm-workers
(i.e. the working poor)
Underclass: one segment of
the unemployed, who suffer
acute disadvantage in the
labour market: Not simply
unemployed, but lacking
access to opportunities for
employment, because of a
lack of (1) skills and (2) social
capital in a labour market
where people get jobs
through friends or family
Not many informal sector
workers, smallholders, etc
40% of households
10% of income
Semi-professional class;
intermediate class; core
working class; and petty
traders:
48% of households
45% of income
Changes in the
social structure
since the early
1990s
Growth of the African
elite and “middle
classes”: in 1995, 30% of
managers in the public
sector were African; by
2001, 51% were African
Productivity and real
wages have risen for
formal sector workers
Unemployment
has risen from its
already very high
levels
Questions: How much mobility is there between classes, either by individuals over time or
between generations?
How have AIDS-related morbidity and mortality affected these?
AIDS-related mortality: impact on
the Human Development Index
HDI components, 1990-2003
0.9
0.8
0.7
0.6
0.5
0.4
0.3
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
life expectancy index
GDP per capita index
educational attainment inded
South Africa’s plummeting Human
Development Index score
HDI and global ranking, 1990-2003
0.74
0.72
80
0.7
0.68
100
0.66
120
0.64
140
0.62
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
global rank (left axis)
HDI (right axis)
HDI score
global ranking
60
The post-apartheid distributional regime
Growth strategy:
External context
Export-led growth plus
“high productivity now”
End of apartheid-era isolation;
globalisation
Growth path:
Export-oriented, skill
and capital-intensive
Policies affecting
employment and
wages
No new social assistance
programmes (although some
pro-poor reforms)
Reallocation of public
expenditure on health and
education to schools and
hospitals in poor areas, but (a)
no commensurate improvement
in quality of schooling and (b)
improving health care offset by
AIDS crisis hence declining life
expectancy
Deracialisation (and
strengthening) of policies
and institutions designed in
1920s
Objective remains higher
wages for workers, not job
creation
Redistribution
Improved service delivery to the
urban poor (including housing)
Who gets what?
150
Labour
productivity
140
130
Real
remuneration
per worker
120
Gross profit
share
110
100
Total nonagricultural
employment
90
80
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
Unemployment rates, 1993-2005, using strict and broad definitions
50
40
% of labour force
The postapartheid
growth path:
30
20
10
0
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
labour
productivity,
real wages,
profits,
employment
and
unemployment
after 1993
South Africa’s Welfare Regime c2005
Unregulated ‘insurance’
and ‘assistance’
Kin:
private transfers
Regulated ‘assistance’
note that total population = c45m
Number of beneficiaries and approximate
benefits
Comments
Perhaps 2 m poor households (10 m people)
receive remittances from other households;
many others receive benefits in kind
(especially meals)
Probably declining, as kinship
obligations and responsibilities are
eroded
There seems to be little data on how many
people receive court-ordered maintenance or
alimony; one (now dated) survey suggested
that about 4% of households received
alimony
?
Pension or provident
funds
Market:
contributory schemes
Unemployment Insurance
Fund (UIF)
Medical aid funds
State:
Non-contributory social
assistance
State: public works
programmes
Negligible (<1% of non-working population of
working age)
57% of waged workers’ employers
contribute (but only 9% of domestic
workers’ employers)
19% of all working-age adults have
employers contributing (LFS 2005)
67% of waged workers pay; 23% of
domestic workers;
24% of all working-age adults (LFS
2005)
14% of population covered (GHS 2005);
34% of waged workers pay; 1% of domestic
workers; 12% of all working-age adults (LFS
2005)
Old-age pension
2.1 m pensioners (March 2006) receive R820
(US$110) per month (from mid-2006)
Child support grant
Nearly 7 m children (March 2006) receive
R190 (US$25) per month (from mid-2006)
Disability grant
1.3 m pensioners (March 2006) receive R820
per month (from mid-2006)
Depends on means and disability
Other programmes
0.4 m pensioners (March 2006) receive grants
of varying value
Depends on means and
circumstances
Employment
1% of adult population (in past 6 months,
GHS 2005 or LFS 2005)
Depends on means
Poverty after apartheid: deepening in late
1990s, then slight improvement in early 2000s
How often did a child in the household go
hungry in the previous 12 months?
40
35
percentage
30
always
25
often
20
sometimes
15
seldom
10
5
0
2002
2003
2004
2005
Public welfare: social assistance
Social assistance beneficiaries (millions) and
expenditures (in 2000 prices, R billion), 19932008/09
40
30
20
10
0
1993
1995
1997
1999
beneficiaries (millions)
2001
2003
2005
2007
expenditures (R billion 2000 prices)
Public welfare: social assistance
Numbers of social assistance beneficiaries, 1993-09 (millions)
14
12
10
state maintenance grant child allowances
8
6
child support grant
care dependency grant
foster care grant
disability grant
old age
4
2
0
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009