Social inequality must be defused

STAFF REPORTER

So said Busiso Moyo from the Studies in Poverty and Inequality Institute (SPII) addressing the Union of Jewish Women recently.

SPII is a non-profit research institute which, among others, focuses on advancing policies that reduce poverty and tackle issues of inequality in South and southern Africa.

Moyo said that South Africa was an upper middle-income country with an annual per capita income of US$6 086,45 in 2014.

“However, we are cited as one of the most unequal countries in the world. Inequality acts as a damper for future possible growth and development,” he said.

The unemployment rate stands at 35 per cent, including workers who have given up looking for a job.

There are 15,3 million people employed, 4,9 million unemployed and 2,4 million discouraged workers.

“We have the highest rate of school enrolment globally, but one of the lowest rates of matriculation. Unlike ageing populations in the north, we have a high youth concentration which is why low levels of education and low youth employment are worrying. We are not reproducing our labour market or transferring skills,” he said

Rapidly increasing urbanisation is placing strain on urban structures and infrastructure. There is a high level of racial tension superficially hidden, but quick to surface.

How do current policies address these tensions and what more can be done, he asked.

“Current government taxation has been found by the World Bank to be redistributive in nature in that the rich get taxed at higher rates than the poor, apart from VAT. The most successful and direct income redistribution is through social security, but many feel that this encourages sloth. Most forget, however, that Europe built its strength after the Second World War on the welfare state,” said Moyo.

Social security is a constitutional right – both social security and social assistance.

Child grants were introduced in 1998 at a value of R330 per child, but this value has never been linked to needs, but to budgetary allocations, he said. There is no assistance for unemployed working-age people, just the Unemployment Insurance Fund which is available for 230 days.

Among other assistance available is fee-free schools, school feeding schemes, free and subsidised healthcare for pregnant women and children up to the age of six.

“Low levels of economic growth, the shrinking of the manufacturing sector, the flooding of cheap imports with the dropping of import tariffs after 1994, high wage inequalities which trap household into inter-generational poverty, underdeveloped rural areas, poor performance on many frontline governments services, especially at local level, are all problems,” he said.

Where does this leave us? With increasingly violent protests as people increasingly feel left behind with no visible chine to break out of marginalisation.

“The 2106 local government elections are likely to increase this tension,” he said.

Part of the solution should be a willingness to agree that the shift from “growth through redistribution” to “redistribution through growth” did not work.

Better education quality with political agreement that teacher unions need to act in a transparent and merit-focused manner, with accountability for poor performance, is another solution.

There should also be a national discussion on what constitutes a decent standard of living for everybody in South Africa, which goes beyond the current survivalist poverty lines of R470 per person per month (in 2009 prices).

Another solution is the extension of social security to poor, working-age people to provide for greater cash circulation in poor communities and hence a bottom- up economic transformation.

“Reindustrialisation is another solution to reduce the balance of trade deficit as we produce locally and export more regionally,” he said.