Social Security and Opportunity: Growing the Economic Cake

Insecurity and the right to social security

The concept of ‘social security’ is enshrined in the Universal Declaration of Human Rights. Article 22 states:

‘Everyone, as a member of society, has the right to social security and is entitled to realization, through national effort and international co-operation and in accordance with the organization and resources of each State, of the economic, social and cultural rights indispensable for his dignity and the free development of his personality.’

This means that the State has an obligation to of assist citizens in their personal development. Most of all it means that the State bears a responsibility to ensure opportunities exist for its citizens to take advantage of. This is perhaps what is meant by the term an ‘enabling government’ in the National Development Plan (NDP). The role social security then plays is not only to bring about equity but efficiency as well [1].

The term can also be more welfare specific when it is linked to government policy aimed at ensuring relative micro-economic security: sufficient sustenance to subsist for vulnerable and dependent groups (social assistance) or those affected by debilitating contingencies (social insurance) [2]. In South Africa’s case these policies seek also to redress the inequalities of the past. But the question remains: if social security is given economic policy priority, does it come at the cost of sustainable economic growth and development [3].

The Constitution of the Republic of South Africa states that, ‘Everyone has the right to have access to social security, including, if they are unable to support themselves and their dependants, appropriate social assistance.’ [4] This constitutional guarantee makes South Africa unique: provision is made for the progressive realisation of social security as an enforceable right against which the government may be held accountable.

Social security thus becomes a method of redistributive justice. The use of this right is evident from the high ratio of government spending on social wages (up to sixty percent); twenty-two percent of the population is dependent on social grants as a main source of income and more than half of the population benefits from some form of social assistance [5]. Worryingly, even though, statically, poverty has decreased since 1994, this is due to an increase in the spread and allocation of social grants and not as a result of economic growth or job creation [6].

This could lead to society becoming vulnerable to the economy; a state of ‘social insecurity’. The severity is compounded by South Africa’s insurance schemes only covering two risks: unemployment and employment injury. The International Labour Organisation’s provides for nine eventualities [7]. Technically, this means that South Africa’s social security system is not comprehensive enough. Candidly put, paraphrasing William Beveridge, there are not jobs for those who can work and no income for those who cannot [8].

In the NDP unemployment and poverty are accorded priority, as it is taken as the biggest human security threat facing the country [9]. The political salience of poverty lies in its demographics: people most affected by poverty are black and/or women in rural areas. As such social security becomes a legitimising tool for government. High levels of unemployment in turn provide the context for these problems. The crux of the matter lies in the concept of ‘opportunity’.

Surveying the clutter: Social security to social protection

The NDP uses specific assignation for social security: social protection. A broader concept than social security, it suggests an approach tailored for development. The goal is not only to ensure a minimum standard of living but also fast-tracking the process of ‘building capacities’ and becoming ‘more competitive’ [10]. This is meant to address the matter of unemployment and poverty through increased opportunity.

The use of these words communicates a developmental narrative of an economy eager to have the domestic building blocks in place to engage effectively within the globally competitive economy. It includes a commitment to, ‘policies [that] should…enable and support labour market participation and provide protection against labour risks including loss of employment’ and narrowing ‘the gap between wages and the cost of living’ [11].

South African labour market and competitiveness

The NDP identifies the labour market as the country’s greatest resource. It is also in that market that the country is confronted with the most significant structural problems which inhibit citizens from making the most of opportunity and securing employment [12].

These problems are compounded by the negative signals sent to domestic and international investors. Poor labour relations resulting in the transport sector strike in 2012, the wildcat mining sector strikes in 2012 and 2013 and the postal service strike of early 2013 have shut out possible investment meaning that less money is coming into the country which undercuts the possibility for opportunities to be accessed by our population. The crucial role that human resource departments should have played in averting these crises resulted in the events of Marikana which in turn have revealed significant underlying problems, such as that the South African social security system does not effectively mitigate social insecurity [13].

This has not added to South Africa’s capability and competitiveness, nor has it placated the much needed assurance-seeking in the investment world. On the contrary, it has vindicated the recent downgrading of South Africa’s sovereign credit ratings which was based on concerns over social and development challenges [14]. In short, social policy and economic growth have not enabled South Africa to secure social cohesion and domestic social peace.

The NDP recognises that the ‘poor and inadequate state of social welfare services and high levels of poverty and inequality produces social problems and high-risk behaviour that undermines human development and social cohesion’ [15]. This is an important admission as it draws attention to matters of service delivery, human development and domestic labour relations that impact upon South Africa’s competitiveness. All of these factors negatively impact upon the State’s capacity to ensure ‘social protection’.

According to the World Economic Forum, some of the inhibiting factors of South Africa’s competitiveness include: an inadequately educated workforce, restrictive labour laws, bad cooperation in labour-employer relations, inflexibility of wage determination, burdensome government regulation and a poor work ethic in national labour force.

The nexus: Unemployment

High levels of unemployment result in social spending being used to assist the unemployed; social grants thus become a substitute for job creation whereas they are only supposed to alleviate and reduce poverty. With rising social spending and a decreasing, highly taxed tax-base, this situation is unsustainable, especially since no opportunity for improvement is created [16].

With a committed focus on unemployment and economic growth, it is hoped that the intended policy outcomes will mean an increase in the tax-base with less fiscal restrictions. This will allow the government to better address the pressing status quo problems of the social security system: better risk coverage, increase the child support grant’s age restriction to eighteen and do away with means-testing for old-age pensions to expand the security net. However, the possibility for short-term change is unlikely as unemployment and poverty are caused by structural issues for which South Africa does not have the financial capacity to quick-fix.

The NDP’s focus on public works is thus a welcome relief, especially if it includes skills training. If not, then the operative word is ‘relief’ and not ‘solution’.

Recommendations: Opportunity versus welfare

It is the creation of opportunity rather than welfare that may be the change factor for a state such as South Africa. This would require a social security system that is not as passive as the current one, where the focus is solely on the payment of benefits.

A basic income grant, for example, opposed to the current conditional income grant, might go some way to extending the coverage of social security. This must be coexistent with decreasing unemployment and rising economic growth, otherwise it will compound the current deleterious trend of fiscal unsustainability.

Linked to this is the consideration of widening the base of risks covered: public pensions and a system of national health insurance. Yet, without a reduction in unemployment and sustainable economic growth, together with the opaque nature of the proposed national health insurance, this is simply not an option; the opportunity for greater welfare does note exist.

How South Africa chooses to address the social security problem is both about domestic economic justice and international competitiveness. For the NDP to achieve the desired capacity and competitiveness upon which goals of job creation, greater income equality and the reduction of poverty are premised requires greater appreciation of the ‘global sphere’ in which policy is implemented.

A stubborn focus on social justice cannot compensate for the economic imperative of development and growth. Whilst focusing on social justice is important in a liberal democratic society such as ours, we must be careful that our social strategy does not detract from an economic rationale which demands growth and development. Nor must the opposite occur. In the words of John Keynes, ‘the political problem of mankind is to combine three things: economic efficiency, social justice, and individual liberty’ [17].

NOTES

[1] Van der Merwe, T. ‘The case for social security in South Africa’, Development Southern Africa, 17:5 (2000).
[2] International Labour Organisation, Social Security, Internet: http://www.ilo.org.
[3] Fedderke, J.,‘Social welfare: social stasis’, Focus, 55:2009, pp. 15-25
[4] The Constitution of the Republic of South Africa, 1996, 27.1c.
[5] Kahn, T. 2013. ‘Social grants increase but ‘no substitute for jobs’, Business Day, 28 February, Internet: http://www.bdlive.co.za/national/2013/02/28/social-grants-increase-but-no-substitute-for-jobs.
[6] Woolard et al. ‘The history and impact of social security in South Africa: experiences and lessons’, Revue canadienned'études du développement, 32:4 (2011).
[7] International Labour Organisation, Social Security (Minimum Standards) Convention, 1952 (no. 102), Internet: http://www.ilo.org/dyn/normlex/en/f?p=1000:55:0::NO::P55_TYPE,P55_LANG,P55_DOCUMENT,P55_NODE:CON,en,C102,%2FDocument. 
[8] Ball, R. (1978). Social security today and tomorrow. New York: Columbia University Press.
[9] Kaseke, E., ‘The role of social security in South Africa’, International Social Work, 53:159 (2010).
[10] National Development Plan: Vision for 2030. National Planning Commission, 11 November 2011.
[11] Ibid.
[12] Ibid.
[13] Bernsyein, A., ‘Marikana and the future of South Africa’s labour market’, Centre for Development and Enterprise.21: 2013, pp. 1-23.
[14] Sovereign Rating List, Standard and Poor’s, Internet: http://www.standardandpoors.com/ratings/sovereigns/ratings-list/en/eu/?subSectorCode=39&start=100&range=50. 
[15] Note 10 above.
[16] Note 6 above
[17] Keynes, J. (1972). Essays in persuasion: the collected writing of John Maynard Keynes. London: Macmillan.

Andrẻ Dumon - dumon86@gmail.com
Former Intern
Helen Suzman Foundation