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Fitting the pieces together:
a composite view of government's strategy to assist the unemployed in South Africa 1994 - 2004


Judith Streak and Carlene van der Westhuizen1
Contact: judith@idasact.org.za

12 October 2004

Posted with permission of the authors.
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Introduction

Job-creation was a leading goal of government policy during the first decade of democracy in South Africa. However, little success has been achieved in the struggle to create sufficient jobs in the economy. Extensive unemployment remains stubbornly entrenched. Using the expanded definition of unemployment (which includes people who have given up looking for work), the unemployment rate was estimated to be 28.6% at the time of the transition to democracy (Altman 2003:5). The most recent estimates (March 2004) find the unemployment rate to be 41.2% using the expanded definition and 27.8% using the strict definition (Statistics South Africa 2004).2 This translates, respectively, into 8.4 million or 4.6 million unemployed people, depending on the definition of unemployment being used.

Four features of the unemployment crisis are important for setting the scene. Firstly, unemployment in South Africa is structural or systemic in nature, not transient. It has grown out of changes in the economic structure since 1970, including those associated with technological development, the declining importance of the agricultural sector, liberalisation and global entry.3 The structural nature of unemployment is also closely tied up with the legacy of apartheid schooling. The second important feature is that unemployment is concentrated amongst the youth (people aged between 18 and 35).

The third is that the overwhelming majority of the unemployed are semi-skilled or unskilled. Fourthly, unemployment in South Africa is not only due to too little demand for labour in the aggregate (linked to insufficient economic growth). The problem is also that the demand for labour does not match the skills profile of the majority of work-seekers (Bhorat 2004). This means, as President Mbeki has pointed out (2002), that much higher rates of economic growth will not, on their own solve the unemployment crisis. The unemployment situation in South Africa has profound implications for poverty, human rights and political stability. Unemployment is associated with extensive and deep poverty at the household level. In the absence of a social assistance programme targeted at the unemployed and with poor access to productive assets (such as land and skills), the majority of the unemployed face a daily struggle to meet their basic needs. This situation is at odds with the Constitution, which gives all South Africans a comprehensive set of justiciable socio-economic rights. It challenges the state to generate and use society’s resources in such a way that everyone – including the millions who are poor due to unemployment – is able to meet basic needs and live a life of dignity.

Over the first ten years of democracy, government’s measures to assist the unemployed (via job-creation and poverty relief) have been informed by three umbrella development strategy documents - the Reconstruction and Development Programme (RDP) of 1994, the Growth, Employment and Redistribution Strategy (GEAR) of 1996 and the Micro- Economic Reform Strategy (MERS) of 2001 – and also the 2003 Growth and Development Summit (GDS). Looking across the entire decade, government’s approach towards job creation and assisting the unemployed shows that even though government has not made its strategy sufficiently explicit, the measures have developed out of a coherent strategy, with continuities in approach over time. The lack of explicitness of the strategy is problematic for three reasons. Firstly, it contributes to misplaced expectations around the power of a particular measure to assist the unemployed, as is the case with the much publicised Expanded Public Works Programme (EPWP). Secondly, it means that the spotlight for monitoring - by researchers, parliamentarians and the press – tends to fall on selective and/or relatively unimportant elements in the strategy. Thirdly, it does not allow an accurate picture to emerge of the remaining gaps in government’s strategy to assist the unemployed.

This paper is the first in a series from Idasa’s Budget Information Service to focus on government’s programming, budgeting and spending for the unemployed. The objective of this paper is to construct an overview of government’s strategy to assist the unemployed and to examine what shifts and changes this strategy reveals over time. In so doing, it aims to provide perspective on the significance of the EPWP as a strategic measure to reduce unemployment and alleviate poverty. The paper also seeks to highlight current gaps in government’s strategy and to consider what type of research is needed to monitor government’s progress in addressing the unemployment crisis.

The paper has five parts, followed by a conclusion. Section one explains the ways in which government can work to assist the unemployed. It identifies two channels of assistance: measures to facilitate job-creation (indirect channel) and measures aimed at providing goods, services or income directly to the unemployed (direct channel). Sections two to five track the evolution of government’s development strategy, covering both the indirect and direct measures adopted over time. Section two gives a brief overview of the development strategy put forward by the RDP, highlighting those elements that have been taken forward in the subsequent design of government’s strategy to assist the unemployed. Section three describes the development strategy and the measures to assist the unemployed proposed in the GEAR policy document, released in June 1996. Section four considers how the strategy to assist the unemployed emerged in practice between 1996 and 2000. Section five gives attention to the post-2000 period. It asks how government’s development strategy and measures to assist the unemployed have shifted in emphasis over the last four years. The conclusion recaps the main points that emerge from the paper.


Footnote:
  1. The authors wish to thank Dr Shun Govender, Alexandra Vennekens and Russell Wildeman (Idasa Budget Information Service), Mr Maikel Lieuw Kie Song (Director of the Expanded Public Works Programme, National Department of Public Works) and Ms Anna McCord (Economics and Statistics Analysis Unit, SALDRU, School of Economics, University of Cape Town) for commenting on a draft of this paper. Also many thanks to Ms Erika Coetzee for editing and layout.
  2. Altman’s measure is based on the October Household Survey 1994 and Statistics South Africa’s the March 2004 Labour Force Survey. Measuring unemployment in South Africa is tricky. For an overview of the problems and the nature of the employment crisis, see Meth 2003, Altman 2003 and Bhorat 2004.
  3. As Altman and Meyer (2003:79) explain, `the build-up of unemployment in South Africa over the past decades can most accurately be attributed to the demise of jobs in traditional resourcebased industries in agriculture and mining, without a concomitant employment take-up in more advanced industrial sectors’. For an historical overview of how structural development in the South African economy, led by expansion of mineral output and the political agenda of the apartheid regime produced a situation of labour surplus prior to 1994, see Altman and Meyer, 2003: 67-69.


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