Eating from One Pot. Sarah Mosoetsa
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and social insurance through private contributions – protect only a select few. State social assistance only covers the disabled, the aged and the young; it does not cater for vulnerable groups. In a context where the majority of people are unemployed or struggling to earn a meagre income in the informal economy, social insurance is not an adequate measure against poverty. It is not surprising that 22 per cent of households in South Africa in 1999 reported that they were going hungry because they could not afford to buy food (Everatt 2004).
As the later chapters of this book will show, vital gender issues have been neglected in the way in which the state provides social assistance in South Africa. Although men have been traditionally considered as the heads and providers of households, they are only included in the social and welfare system when they reach 65, the pensionable age for men. A newly unemployed man will, therefore, lose his role as household provider until he turns 63. Unemployed women, on the other hand, are eligible for pensions at 60 and are also able to access child-support grants. This radically changes household dynamics: women assume the new role of provider and men feel insecure. While there is no direct causal link between domestic violence and changes in household income distribution, the distribution of household income is undoubtedly a factor in many household conflicts.
State transfers have certainly mitigated the effects of poverty in the country. Not only does poverty remain a major problem in the country, but the gap between the poor and the rest of the population is growing. This is reflected by the statistics. The Human Development Report shows that the Gini coefficient rose from 0,596 to 0,635 between 1995 and 2001.5 This coefficient measures the levels of income inequality in a country and also between countries: 0 represents perfect equality, while 1 corresponds with extreme inequality. South Africa’s Human Development Index (HDI), the index which measures a country’s average life expectancy, its adult literacy rate and its standard of living, declined from 0.72 in 1990 to 0.67 in 2003. In 2002, 21,9 million (48,5 per cent) of all South Africans fell below the national poverty line of R354 a month. The Eastern Cape emerged as the poorest province but KwaZulu-Natal was not far behind.
CALLS FOR THE INTRODUCTION OF A BASIC INCOME GRANT
The inadequacy of the present system of grants, along with rising levels of unemployment, has led to calls for the introduction of a Basic Income Grant (BIG), by both civil society and organised labour, as part of a ‘comprehensive social security system.’6 The Congress of South African Trade Unions (Cosatu) and various NGOs contend that such a system should be an integral part of social citizenship rights. The BIG Coalition has demanded a universal monthly grant of R100 (Cosatu, 2000b; Makino, 2003). A basic income grant, it is argued, would reduce arbitrary discretion, minimise opportunities for corruption and reduce the poverty gap by 74 per cent. With full take-up, the number of poor South Africans excluded from the social security system would be reduced to zero (Samson, 2002:77). Proponents contend that a BIG has the potential to contribute to economic activity and job creation in three ways: by adding to the accumulation of social capital and cohesiveness, by increasing the demand for labour by directly stimulating economic activity, and by its impact on the level and composition of aggregate demand (Samson et al., 2001).
The introduction of a BIG is seen by some as a fiscally unviable and over-ambitious project for South Africa (South Africa Foundation, 2002), an idea that is not even conceivable in many wealthier countries. Trevor Manuel, the former finance minister, argued that the notion of a basic income grant was ‘fundamentally flawed’ and that its implementation would bankrupt South Africa. He estimated that it would cost R83 billion. The government would ‘probably have to raise VAT by at least another 14 per cent to fund the R83 billion.’7 Critics of a BIG have also pointed out that welfare states have been under enormous ideological and political pressure around the world in recent times. The political and social environment that enabled their success no longer exists (Esping-Anderson, 1996; Pierson, 2001; Seekings, 2002). High unemployment rates have resulted in fewer tax contributions to the state. The restructuring of work and shift in government policies towards cost recovery and strict fiscal discipline have challenged the very notion of welfarism.
It has also been argued that state transfers do not necessarily reduce poverty and do not encourage real economic redress or reduce inequality. Such claims have been rejected by proponents of the BIG who argue that the benefits would have a ripple effect on the economy. Recent evidence from Namibia suggests that there would indeed be important socio-economic benefits if a universal grant were to be introduced.8 It does not appear likely, though, that the universal income grant will be adopted as national policy in the short term. The BIG initiative does, however, reveal a lot about the role of civil society and its relationship to the state in South Africa, a relationship that, as we shall see, also plays itself out in the two townships that are studied in this book.
Poverty and unemployment in KwaZulu-Natal
Between 1990 and 2004, the number of people working in the formal economy in the country declined by almost a million, while the number of those working in the informal economy rose by two million. The majority of the unemployed are located in rural areas and in poor provinces. The provinces with the highest unemployment rate in 2004 were Eastern Cape (32,5 per cent), KwaZulu-Natal (32,2 per cent), Limpopo (30,9 per cent) and North West (30,4 per cent) (StatsSA, 2004).
Poverty in KwaZulu-Natal, home to the two communities that are examined in this book, is increasing. Approximately two million children live in households whose monthly per capita income is less than R350 a month (StatsSA, General Household Survey, 2002-2007). The province also has the biggest HIV and AIDS problem in the country.9
South Africa became a signatory of the Marrakech Agreement, which replaced the General Agreement on Tariffs and Trade (GATT), in 1994. This marked the beginning of a new phase of accelerated trade liberalisation in the country, in accordance with the ‘shock treatment’ economic principles recommended by the World Trade Organisation (WTO). Manufacturing underwent radical changes as South Africa pursued trade liberalisation and implemented macro-economic policies that were intended to enable it to compete internationally and to position itself on the ‘high road’ – a route that emphasises high skills through training and high wages through effective collective bargaining, rewards and incentive schemes. Trade liberalisation entailed a shift away from the country’s previous import substitution industrialisation policies. This had a devastating effect on the manufacturing sector in KwaZulu-Natal.10 Retrenchments, relocations, and factory closures became a regular feature of neo-liberal, post-apartheid KwaZulu-Natal. By 1998, it was estimated that 23 per cent of manufacturing jobs in Durban had been lost (Sitas, 2002). The two dominant manufacturing sectors of the province’s economy – clothing and textiles, and footwear – were badly affected. There were massive job losses as factories tried to compete with imports coming from China and Taiwan. The two sectors experienced a 6,3 per cent and 43 per cent decline in employment respectively, between 1992 and 2002. Employment in the footwear industry declined from 27 882 in 1995 to a mere 12 035 in 2002. Production and wages also declined in both sectors in the same period (see Table 1.4.). This trend was accompanied by the growing informalisation of work in the clothing and textile industry and the use of subcontracted labour in order to deliberately evade labour legislation (Fakude, 2000; Skinner & Valodia, 2002). While there has been little export growth in either sector, imports have increased dramatically. Footwear imports increased from 13 per cent in 1992 to 47 per cent in 2002; textile imports increased from 23 per cent to 31 per cent in the same period.
TABLE 1.4 Output, employment and wages in the textile and footwear sectors in South Africa, 1993-2002
Source: Bezuidenhout, Mosoetsa & Roberts (2004).
Notes: Data for 1993 to 1997 are year averages while the data for 1998 to 2001 reflect figures from June of each year. The former homelands were only included from 1996, hence the break shown in the series. Output is in constant 1995 rand millions. Output: labour is rand thousands, constant 1995 prices. Capital: labour (K/L) ratio is