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Employment
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Presentation to:the Joint Budget
Committeeon the Medium Term
Budget Policy StatementEmployment & Social
SecurityNovember 19, 2003Dr. Miriam AltmanDr. Ingrid Woolard
Employment & Economic Policy Research ProgrammeHuman Sciences Research Council
[email protected]@ 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
Implications for most categories of workers & graduates to find workEspecially problem for black workers & graduatesContrary to perception, still easier for white graduates in private sector
Unemployment by race (strict def'n)
05
1015
2025
3035
40
94 95 96 97 98 99 00 01Year
% u
nem
ploy
ed
Total
African
Coloured
Asian
White
Source: OHS, LFS
-15
-10
-5
0
5
Sector
% c
hang
e
% change 1991-1995
% change 1996-2000Source: TIPS, Standardised Industry Database
Employment by sector
0
2 000
4 000
6 000
8 000
10 000
12 000
94 95 96 97 98 99 00 01 02
Empl
oym
ent (
'000
s)
Commercialagriculture
Formal sector(excl. agriculture)
Informal sector
Subsistenceagriculture
Domestic service
Total (exclsubs.agric.)
GDP & Formal Employment
If taken from 1998, formal private sector employment growing with GDPNote context:
Falling real average incomes of low to medium skill formal sector workersAbout 500,000 people called ‘employed’ earn ‘in-kind’ and do not earn moneyPublic sector employment seems to be weighing down on employment
707580859095
100105110115120
1994 1995 1996 1997 1998 1999 2000 2001 2002
Inde
x (1
999
= 10
0)
Public Private, non-agricTotal Formal Employment GDP Value (1995 prices)Mil
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)
0
10
20
30
40
50
60
70
80
00/01 01/02 02/03 03/04 04/05 05/06
R B
illio
n
National Provincial
Municipalities Public Enterprises
Extra-budgetary instutions Public-Private Partnerships
TOTAL
Ability to deliver???Actual and Planned Capital Expenditure of Local
Government 1996 – 2001
Source - Eskom
0
2
4
6
8
10
12
14
16
96/97 97/98 98/99 99/00 00/01
R B
illio
n
Capital Budget Capital Expenditure
0
2
4
6
8
10
12
14
16
96/97 97/98 98/99 99/00 00/01
R B
illio
n
Capital Budget Capital Expenditure
Expenditure on ECD & HIV Home Care
(deflated)
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
2003/4 - 2005/6 estimates
0
100
200
300
400
500
600
1999
/00
2000
/01
2001
/02
2002
/03
2003
/04
2004
/05
2005
/06
Mill
ion
Rand
(d
efla
ted
- 200
3/4)
ECD HIV/AIDS
0
100
200
300
400
500
600
1999
/00
2000
/01
2001
/02
2002
/03
2003
/04
2004
/05
2005
/06
Mill
ion
Rand
(d
efla
ted
- 200
3/4)
ECD HIV/AIDS
Social Security
Household access to wage income
Year households with wage-earners (m)
% of households with wage-earners
1995 6.2 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 Number of beneficiaries
Amount p.m.
Old Age Pension
2.0 mn 1.40 bn
Disability 1.1 mn 0.78 bnFoster Care 0.18 mn 0.09 bnCSG 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
Wes
tern
Cap
e
Eas
tern
Cap
e
Nor
ther
n C
ape
Fre
e S
tate
KwaZ
ulu
Nat
al
Nor
th-W
est
Gau
teng
Mpu
mal
anga
Lim
popo
ALL
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%% of elderly in poverty after SOAP% of elderly in poverty before grants
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 take-up 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 Extended Child Support Grant.o The aging of the populationo The impact of AIDS illnesso Are we effectively counting potential beneficiaries? What
are the possible cost implications?