South Africa needs to revisit and rethink the use and role of its social security system, not as a poverty alleviation tool, but as a demand-side economic stimulus to meet short-term economic growth.
One of the pillars used by the World Economic Forum to assess global risk and growth is inclusiveness. Under this pillar, the provision of basic services and access to adequate social protection remain major drivers of inclusion.
Upper middle-income economies have an average score of 54.8, exhibiting a somewhat stronger inclusive growth performance. South Africa has an inclusive score of 52.9 — a generous rating compared to our Gini Coefficient measure of 0.63, a measure of the gap between the top 1% and the poorest of the poor.
Location, race, gender, age and parental status play a crucial role in South Africa’s overall inequality measures.
Entering 2024 with these weak inclusive measures, one must ask the important question of what South Africa will do differently this year to reduce inequality and unemployment while stimulating economic growth.
South Africa has done a remarkable job of increasing the allocation of expenditure on the provision of basic services, with spending on education topping the fiscal budget allocation year after year.
But an area that the country continues to shy away from is examining our social security system. In 1994, when the new government came into power, it adopted the already existing social security system developed by the apartheid government. Without addressing and examining the purpose of our social security system, the only new introductions were on the child support grant front.
Other existing grants, such as the old age grant and disability grants, were merely extended to include black people without needs assessments of these groups or an audit of excluded groups, particularly the 18- to 59-year-olds, who were completely excluded.
Young black females bear the brunt of unemployment, currently at 40%. The idea that this group can continue being ignored by our social security system while aiming to increase inclusion is diabolical.
An expansive — in coverage and value — social security system fit for purpose is not only a means to achieve inclusion but is an economic tool many countries have used, at least in the short term, to address economic challenges such as sudden shocks hampering growth.
Between March 2020 and May 2021, 222 countries implemented 3,333 social protection measures to protect incomes, jobs and livelihoods despite sharp declines in taxes and other sources of revenue. This highlights the important role social security can play as an economic stabiliser.
Covid-19 response systems displayed this with irrefutable evidence and revealed the speed with which such policies can be implemented at both global and domestic levels.
Coupled with other supply-side policies, including investments in infrastructure, South Africa needs to revisit and rethink the use and role of its social security system, not as a poverty alleviation tool, but as a demand-side economic stimulus to meet short-term economic growth.
The need to adapt the entire social security system to meet the present-day needs of ordinary people, primarily young black women, is also necessary. If you are a 25-year-old black woman with a PhD and are unemployed, have never worked and are actively looking for employment and cannot find any (a lived reality in South Africa), you have no support from our social security system and have no financial claim or stake in the economy whatsoever.
If overhauled by the addition of a universal basic income, our inadequate social security system could become a critical buffer for the unemployed to prevent the 25-year-old graduate from having to beg on the side of the road holding a placard saying: “I need food.”
