National Policy Coherence Initiative: South Africa

Status Report

28 September 2007

Background:

Mid-2006, ILO Pretoria Director, Judica Makhetha, requested INTEGRATION assistance in assessing policy responses to the problems of the “second economy”, a term introduced by President Mbeki in 2003 to refer to the underdeveloped, marginalized part of the South African economy, consisting of millions of people living in poverty, with no or little access to employment and wage income. Policy advice in regards to the “second economy” is an ILO commitment under the UNDAF for South Africa.

Current status:

Based on a preliminary review of literature on the SA “second economy” discourse and research, policy issues from the decent work perspective were initially identified and discussed with Ms. Makhetha and Steve Miller (EMP/INVEST and ASIST are providing technical assistance the South Africa public works programme, a major government response to the second economy). It was decided that the research could be further elaborated. After review of national data, studies and face-to-face consultations with relevant government agencies, academic researchers and experts and tripartite partners, as well as consultations/collaboration with relevant ILO units, we have now come up with a research proposal that (i) reflects national current, key policy debate and interests, and (ii) enjoys the interest and support from national stakeholders, including government offices directly concerned by the research topic and tripartite partners. Given time and financial constraints, we have also narrowed down the research to two priority research questions which could be addressed before end 2007. See Appendix A for most recent version of draft proposal.

Focus of proposed policy research:

The proposed research looks at the role of the Expanded Public Works Programme (EPWP) in South Africa in reducing income insecurity and promoting employment, and at how it interacts with existing social grants (cash transfers) provided to old-age pensioners, caregivers of children in poor households, and persons with disabilities. The Government of South Africa has adopted a number of measures to reduce poverty and promote employment. But, the EPWP has gained policy prominence, ascribed with considerable potential to address unemployment and poverty in South Africa. It is the only programme with both employment and social protection elements that are directed to the working-age population who are able to work and willing to work but cannot find work. About 70% of households with at least one unemployed belong to the bottom two expenditure categories. In poorest households (bottom income decile), 36% of adults are in labour force, of whom 3/4ths are unemployed; or only 9% of working-age population are employed. Households in the top income decile have 68% of adults working.

The initial, rather controversial debate on policy responses to the “second economy” appeared to have put social assistance and social grants in opposition to the employment-creation strategies, such as EPWP that provides mostly temporary, short-term jobs. This research proposal works on the basis of certain hypotheses. First, the availability of remunerative employment and access to it by those who are able and willing to work is central to poverty reduction. Second, a minimum level of social protection, which guarantees the basic needs (food, health, shelter etc) of all individuals who are unable to work or who are able to work but cannot find work, is equally important. Social grants and the EPWP are thus expected to be mutually reinforcing. Murgai and Ravallion¹ argue that direct cash transfers to potential workers would be a more efficient means to achieve poverty reduction. This research would examine the validity of this argument in the South African context.

The main criticism levelled against the EPWP is that it cannot provide an adequate response to the massive unemployment and poverty problem in the country: EPWP jobs are episodic and on the average last 4 months while unemployment is massive and largely chronic in nature. How can its impact and its functionality be enhanced – under what conditions, on what scale, which regions or population groups? The research addresses several questions relating to design and modalities of implementation including applicability of an employment guarantee scheme.

The research aims to contribute to the national policy debate and help build the empirical basis for national policy choices. The ANC, which celebrates its 95^th anniversary this year, held a National Policy Conference in June 2007 and its 52^nd National Conference later in the year. 2007 is viewed as a critical year for assessing the Government’s programmes and progress towards eradicating poverty and legacies of apartheid. In addition, this research complements a mapping and review of all government responses to unemployment and poverty that the Office of the President plans to undertake. Finally, this research contributes to the UN Development Assistance Framework (UNDAF) agreed upon by the UN and Government of South Africa, which includes, among others, assistance to the Government in addressing the problems of the “second economy”, and the development of a Decent Work Country Programme.

Work done:

December 2006: produced and circulated a research concept note

January-February 2007: consultations on research concept; circulated concept note for comments by ILO Pretoria (J. Makhetha, C. Yinusa), SRO Harare (T. Fashoyin, Raj Paratian, M. Ruck), ASIST-Africa (D. Sahle), EMP/INVEST (Stephen Miller) and SEC/SOC (K. Hagemejer, C. Behrendt); revised concept note.

March 2007: meeting with experts and key stakeholders in Cape Town, conducted jointly by J. Makhetha and A. King Dejardin, to clarify policy issues and directions of research. SRO Harare could not participate due to other commitments.

May 2007: first draft full research proposal circulated to ILO Pretoria, ASIST-Africa, EMP/INVEST

July 2007: second draft of research proposal

August 2007: mission to Pretoria to get feedback on revised proposal and secure support from EPWP agency, Presidency, other key agencies and tripartite partners; determine availability of local EPWP funding; begin assessing potential researchers

September 2007: external consultant engaged by EMP/INVEST continued preparations for research; available datasets assessed; assessed; methodology elaborated but few gaps to be resolved; suitable researcher/centres short-listed.

Collaboration with ILO Field Offices:

ILO Pretoria – technical inputs, networking with SA actors, financial contribution

ASIST-Africa and EMP/INVEST project in South Africa – inputs for research formulation, networking with SA actors

SRO Harare – inputs during initial phase of proposal formulation

Collaboration with HQ units:

EMP/INVEST – technical inputs for research formulation; financial contribution

SEC/SOC – technical inputs in first stages of research formulation

EMP/POLICY – information & consultation (Azita Berar-Awad, the EMPLOI focal point for South Africa DWCP)

STAT – information (Ralf Hussmann is providing technical assistance to StatsSA)

¹ Rinku Murgai and Martin Ravallion, “Employment Guarantee in Rural India: What Would it Cost and How Much Would It Reduce Poverty?” Economic and Political Weekly, July 30, 2005.