By Isobel Frye · 26 Aug 2008
South Africa has arguably one of the most extensive social security systems amongst developing countries. Currently just over 12 million people receive some form of social assistance grant, and in addition we have a number of social insurance schemes, including the Unemployment Insurance Fund and private pension and provident funds which together form a social security system.
The main historical objective of social security is to secure people against vulnerability which arises as a result of the interruption of an income stream. The roots of the design of the current social security system in South Africa was aimed at protecting the white population under the apartheid regime, with nominal inclusion for black people – nominal both in the sense of types of grants available to black people, but in the sense that the value of welfare grants for black people in South Africa until 1993 was always lower than that available for whites.
This design of social security was based on a post World War Two response by states such as the United Kingdom to the post war social and economic insecurity. It was linked to a concerted drive to create full employment to stabilise these damaged and displaced societies, and thus this design saw full employment as a given norm. This meant that social security was aimed at people who were not expected to be able to earn an income – children, people who had retired and people who as a result of a disability were not able to work. Working age people were protected by a contributory unemployment insurance system that would be expected to tide them over until they had found another job. This system was adopted for South African whites, together with the full employment labour market policies for whites which saw expression in protected white employment under the Apartheid government and job reservation.
Section 27(1)(c) of the South African Constitution provides a universal right to social security to everybody, and the right to social assistance (tax funded, non contributory assistance) is specifically guaranteed to those who are not able to provide for themselves and their dependents.
The challenge from a policy design perspective to realise these Constitutional rights is how a system based on very alien assumptions can achieve the right of universal society security in a country that is faced with the very high levels of poverty and unemployment as South Africa.
Social grants have to all intents become the flagship anti-poverty strategy in South Africa. The simplicity of directing cash directly into poor households has an elegance that is compelling; the problem is that the current system only targets poor children under 15, the elderly and people living with disabilities. Working age people who are poor have no specific way of enjoying their constitutional right to social security and social assistance. In addition, given the historical design of the social security system, the issue of the status of chronic illnesses, including TB and HIV, as a ground for accessing a disability grant, is at best unclear and is randomly interpreted in different regions of the country.
Another effect of the current targeted design of social grants is that while a grant might in theory be targeted at a child or an old age person, when this income is the only real regular income into a poor household, the money is used to support everybody in that household. Does this constitute an abuse of that grant, or a failure of the design?
Because social assistance is funded through income tax (raised from those who earn an income), it has some impact as a mechanism of redistribution. In fact the recent Income and Expenditure Survey (2005/6) by Statistics South Africa specifically stated that the impact of current social grants significantly reduces the incredibly high levels of income inequality in South Africa.
Ideologically there are some people who object that grants create dependency on the state, undermining people’s incentives to look for a job. In a country of such high levels of unemployment and where the value of the grants are so slight, that is a concern that speaks to its own absurdity. In various research projects, when asked whether a respondent would prefer a grant or a job, the answer is invariably a job. Employment not only produces higher levels of income, but carries with it broader social benefits of standing and self affirmation that being unemployed and marginalised does not do.
The recommendations of the 2002 Report of the Committee of Inquiry into a Comprehensive Social Security System for South Africa (the “Taylor Report”) expanded the idea of social security by introducing the notion of social protection. It also recommended the provision of a minimal income security for everybody in the country – the so-called “basic income grant” idea.
Policy makers and many sectors of South African society have been grappling with the question of how to address people’s poverty and the social dynamics of exclusion. Currently the Department of Social Development, together with other line departments within government have been tasked with reforming the social security policy to address some of these concerns.
There are a number of policy alternatives that are being considered. These range from the introduction of a mandatory retirement reform contribution for people who are employed, to potential ways of providing basic income security for poor people, linked to skills development, job placements, care givers’ acknowledgement and community based involvement by recipients. Some of the debates are by nature highly technical, but currently the Department of Social Development has embarked, in partnership with civil society, to engage with ordinary people to ask the question: what type of assistance would be beneficial to you to enable you and your household to move out of destitution and embark on a sustainable livelihood strategy?
Some naysayers raise a concern about the financial sustainability of expanding social security. In a country as riddled with poverty and unemployment as ours, and characterised by one of the highest income inequality distribution in the world, the question must be inverted – can we afford not to be taking bold steps to arrest and turn the trends around, acknowledging the negative impact to our social fabric and cohesiveness that poverty and inequality continue to build on a daily basis and with potential to undermine the national project for generations to come?
There are two things that are necessary in a people oriented modern society, both established at regular intervals by democratic vote.
The one is a Basic Income Grant [BIG] awarded to every citizen as of right, and the other is a cap on wealth.
BIG would be simple to administer as every citizen would get it automatically. The State would recover unnecessary grants from those who did not need them through the tax system. Those whose wealth exceeded the cap would have the option of giving the excess to accreditted charities or failing that to having the excess taxed away.
This approach would have a number of advantages
1. Simplified administration of BIG and removal of opportunities for corruption
2. Reduced wealth differentials
3. Remove any stigma linked to social grants as everbody would be getting BIG
4. As everybody gets BIG it would help to cultivate a spirit of togetherness
5. The labour legislation could be relaxed because you would not become incomeless without a job