South Africa’s welfare system is exceptional amongst middle-income and developing countries (Seekings, 2005b). It provides generous means-tested noncontributory old-age pensions for the elderly, disability grants for those too ill or incapacitated to work, and child support grants for the care-givers of children. Approximately 10 million social grants are paid out each month,
amounting to about 3% of the Gross Domestic Product. But despite this relatively generous level of social assistance, pressure on the welfare system continues to grow – most notably on disability grants which rose from about 600,000 in 2000 to almost 1.3 million in 2004 (see also Nattrass, 2006).
This is in part a consequence of the Aids epidemic. As can be seen in Figure 1, South Africa has one of the highest rates of HIV infection in the world. According to the ASSA2003 demographic model, by 2004, half a million new Aids sick cases were occurring each year.1 Many of these people were able to access disability grants. A recent analysis of a sample of disability grant files reported that the number of disability grants for people suffering from ‘retroviral disease’ or who were ‘immuno-compromised’ rose from 27% in 2001 to 41% in 2003 (CASE, 2005: 63).
However, Aids is not the only reason for the rapid take-up in disability grants. The increase was facilitated by institutional changes to the disability grant system that enabled local decision-makers to respond to growing pressure from citizens to use the disability grant in part as a form of poverty relief. This pressure, in turn, is a consequence of South Africa’s high rate of unemployment (see Figures 1 and 2) and the absence of any social security for the unemployed.2 Unemployment is now the major driver of poverty and inequality (Seekings and Nattrass, 2005) – a situation exacerbated for many by the Aids epidemic (Nattrass, 2004b). Given that the disability grant is the only social grant available to adults of working age, it is unsurprising that South Africa’s dual crisis of unemployment and Aids (see Figure 1) is resulting in a sharp increase in disability grants.
Figure 1: A Comparative Perspective on AIDS and Unemployment
This poses a major challenge for South Africa’s welfare system: should it continue to be based on the manifestly incorrect premise that all able bodied adults can support themselves through work; or should it be redesigned to address the large hole in the welfare net through which so many unemployed people are currently falling? This paper argues that in light of the perverse
incentives generated by the current system (which leaves many people choosing between income and health), wide-ranging changes are needed to the welfare system. Building on earlier work (Nattrass, 2006), the paper argues that there is growing evidence that current disability policy is creating incentives for people to become and/or remain ill – and that this could be exacerbating the Aids epidemic and undermining the antiretroviral treatment rollout.
There is also evidence of an emerging recognition on the part of local decisionmakers of the legitimacy of claims by poor people to improved levels of social security – especially for the unemployed. Recent changes wrought by the national government to tighten up access to the disability grant, thus fly in the face of this emerging discourse of citizens rights. They are therefore likely to be unpopular and will probably continue to be subverted by local decision-makers wherever possible. Rather than attempting to restrict access to social grants, a case is made for broadening access to the unemployed either by introducing an
employment guarantee scheme (to provide jobs directly) or a basic income grant (to provide a minimum, unconditional, income to all citizens).
The ASSA model can be downloaded from the ASSA website: www.assa.org.za.
There is some social insurance for the unemployed. The Unemployment Insurance Fund (UIF) provides income support for up to 36 weeks for those who have contributed to the fund who subsequently become unemployed. However, typically fewer than 5% of unemployed people receive UIF payments.