Transcript employed

Presentation to:
the Joint Budget Committee
on the Medium Term Budget
Policy Statement
Employment & Social Security
November 19, 2003
Dr. Miriam Altman
Dr. Ingrid Woolard
Employment & Economic Policy Research Programme
Human Sciences Research Council
[email protected]
iwoolard@ hsrc.ac.za
Critical dilemma


Finding balance, in context of
massive social imperatives
Balance between
 Social security to ensure basic standard
of living
 Employment & investment policy to
ensure longer term labour absorbing
growth path

Trade off does exist
Employment
Unemployment rising across race groups
Unemployment by race (strict def'n)
Total
% unem ployed
40
A f rican
35
Coloured
30
A sian
25
White
20
15
10
5
0
94
95
96
97
98
Ye a r
99
00
01
Source: OHS, LFS
Implications for most categories of workers & graduates to find work
Especially problem for black workers & graduates
Contrary to perception, still easier for white graduates in private sector
Employment by sector
12 000
10 000
re
l tu
u
ri c
Ag
ing
in
M
g
ri n
tu
c
a
e
uf
ad
an
r
M
T
tri
ec
l
E
y
ci t
s
es
n
i
s
Bu
r
Se
es
vi c
rt
po
s
an
Tr
ns
Co
on
cti
u
tr
ity
un
m
m
Co
s
i ce
v
r
Se
Al
s
ri e
st
u
d
l in
8 000
Formal sector
(excl. agriculture)
Informal sector
0
6 000
% change
Employment ('000s)
5
Commercial
agriculture
Subsistence
agriculture
-5
4 000
Domestic service
-10
2 000
-15
Total (excl
subs.agric.)
0
94
95
96
Source: TIPS, Standardised Industry Database
97
Sector
98
% change 1991-1995
99
00
01% change
02 1996-2000
GDP & Formal Employment
Index (1999 = 100)
120
115
110
105
100
95
90
85
80
75
70
1994
1995
1996
Public
Total Formal Employment
1997
1998
1999
2000
2001
2002
Private, non-agric
GDP V alue (1995 prices)Mil
If taken from 1998, formal private sector employment growing with GDP
Note context:
Falling real average incomes of low to medium skill formal sector workers
About 500,000 people called ‘employed’ earn ‘in-kind’ and do not earn money
Public sector employment seems to be weighing down on employment
Employment Objectives
Gov’t and ANC have unemployment goal
= ½ unemployment by 2014


This would mean unemployment at about 15.3%
Would require generation of R 4.1 mn net new
jobs or avg of 372,000 jobs created annually.
 Estimate that economic growth & existing interventions
could result in 1.8 mn jobs
 Some interventions required to address creation of
remaining 2.3 mn jobs or 209,000 per year.
 If created by public procurement – very serious financial
implications (eg. @ R50,000 per job, would cost R 10bn
per year, on additive basis)
Some alternative sources being
debated = ?





Infrastructure
Expanded Public Works Programmes
Expanding social services
Social security – esp for shortfall
Recognise complementarity in spending to
meeting basic needs & creating employment
Construction expenditure – projections (deflated)
80
70
R B illio n
60
50
40
30
20
10
0
00/01
01/02
02/03
03/04
04/05
05/06
N a ti o n a l
P r o vi n c i a l
M u n i c i p a l i ti e s
P u b l i c E n te r p r i s e s
E xtr a - b u d g e ta r y i n s tu ti o n s
P u b l i c - P r i va te P a r tn e r s h i p s
T O T AL
Ability to deliver???
Actual and Planned Capital Expenditure of Local Government
1996 – 2001
16
14
R Billion
12
10
8
6
4
2
0
96/97
97/98
Capital Budget
Source - Eskom
98/99
99/00
Capital Expenditure
00/01
Expenditure on ECD & HIV Home Care
(deflated)
Million Rand
(deflated - 2003/4)
600
500
400
300
200
100
0
0
/0
9
9
19
1
/0
0
0
20
2003/4 - 2005/6 estimates

2
/0
1
0
20
3
/0
2
0
20
ECD
4
/0
3
0
20
5
/0
4
0
20
6
/0
5
0
20
HIV/AIDS
Huge need, room for expansion, massive employment creator
 Approx. 1.8 million people in formal community services (vs. approx 250,000 in
construction)
Complementarity – ARV roll-out, orphan care, home care, ECD, etc
Social Security
Household access to wage income
Year
1995
households with
wage-earners (m)
6.2
% of households with
wage-earners
71.3%
1997
5.9
63.3%
1998
5.9
63.4%
1999
7.4
67.9%
2000
7.8
70.1%
2001
7.5
68.5%
2002
7.2
66.0%
Many poor households rely
entirely on grants

Poorest 20% of households:
 19% have grants as main source of
income

Next poorest 20% of households:
 28% have grants as main source of
income
Social Security Spending
Grant Type
Old Age
Pension
Disability
Number of
Amount p.m.
beneficiaries
2.0 mn
1.40 bn
1.1 mn
0.78 bn
Foster Care
0.18 mn
0.09 bn
CSG
3.8 mn
0.60 bn
Source: SOCPEN October 2003
Old Age Pension
• Level of grant is more than twice
average per capita income for Africans
• Generous by international comparisons
(1.2% of GDP)
• Take-up is very high (close to 100%?)
• Gender sensitive – more than twice as
many women as men get the grant
• Reaches many households with
children
Old Age Pension
90%
% of elderly in poverty after SOAP
80%
% of elderly in poverty befor e gr ants
70%
60%
50%
40%
30%
20%
ALL
Limpopo
Mpumalanga
Gauteng
Nor th-West
KwaZulu Natal
F ree State
Northern Cape
Eastern Cape
0%
Western Cape
10%
Child Support Grant
• HSRC estimates that there are 6 million
potential CSG beneficiaries under the
age of 9
• Only 3.8 million have registered to date,
but
• Registrations have been increasing
dramatically –
• more than 1 million children added since
March 2003 alone
Disability



Number of beneficiaries grew by 36%
between February & October 2003
Regional variation suggests that takeup may continue to grow:e.g. in Limpopo 3% of adults receive
disability grant
vs 7% of adults in Eastern Cape
Foster Care


180 000 children currently
Growing slowly:
AIDS orphans may  pressure
Roll out of ARV should slow growth
Concluding remarks


Balance between social security &
employment imperatives could have serious
budgetary implications in future
Required job creation to meet employment
targets could cost R 10bn on additive basis.
 Potential for policy complementarity
 Fiscally sustainable?

Social security --o
o
o
o
Extended Child Support Grant.
The aging of the population
The impact of AIDS illness
Are we effectively counting potential beneficiaries? What are the
possible cost implications?