Social development minister Lindiwe Zulu has hastily withdrawn the green paper on reforming the country’s welfare structure released two weeks ago that, among other recommendations, proposed a 12% tax on incomes to fund a state-controlled social security fund.
The Department of Social Development (DSD) released the paper on August 18 for public comment, but it met with stinging criticism from some sectors of the public, business, and significantly from National Treasury, which said it had not been adequately consulted.
The paper did however receive support from some civic organizations, particularly those pushing for the introduction of a universal basic income grant (BIG), as well as from trade unions.
In a statement on Wednesday, the DSD said the proposals in the green paper had been “misunderstood” and “misinterpreted”. The department said it would re-release the paper “soon” when the confusion had been addressed.
“Some of the technical aspects of the proposals were not well understood and many have misrepresented the proposals, particularly on the National Social Security Fund,” the department said. “It has become apparent that some of these areas need further clarification to avoid any further confusion.”
The paper proposed setting up a National Social Security Fund into which employers and employees would pay up to 12% of their earnings, with a ceiling of R276,000 per year. It would also see a consolidation of the various welfare funds like Unemployment Insurance Fund (UIF) and social benefits paid for maternity, illness, disability and death.
South Africa’s social welfare net is among the largest in the world, but with unemployment of close to 40% and nearly half of citizens living in poverty — a situation worsened by the pandemic and partly to blame for the riots and looting in July that led to more than 350 deaths — the gaps in financial support for the poor and jobless became more apparent, upping the political pressure on President Cyril Ramaphosa to loosen the taps on spending.
That pressure led to the reinstatement of the R350 Social Relief of Distress grant after it ended in April, and it will remain in place until March 2022, but with a steely caveat from the Treasury that it would not commit to any permanent expenditure policy that would mean deviating from the fiscal policy of cutting spending and bringing down the budget deficit and public debt.
The surprise release of the green paper seemed to fly in the face of those commitments, so the fleet-footed rebuke from the Treasury came as no surprise. Some analysts also read the move as defiance by Minister Zulu of Ramaphosa.
Workers’ group, the South African Federation of Trade Unions (Saftu), criticised the withdrawal of the paper.
“The paper was a huge step in the right direction. The only problematic provisions of the paper were those that were provisioned to levy the remunerations of workers,” Saftu said in a statement. BM/DM
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yet another thoughtless and incompetent cabinet minister who clearly does not know or understand her portfolio!
Rory, none of them do. Surprisingly, there is no competence requirement for entry to parliament, and the cabinet is comprised of MP’s. That is the crux of the problem. It is actually easy to fix but will never happen. Introduce and enforce sound Competency, Integrity and Personal Accountability standards. Everything else will come right.
We have a huge social security problem due to about 40% unemployment and our tax base is shrinking. Tax in South Africa is already high and combined with restrictive labour laws and militant union activity, the government thinks a tax increase will solve the problem? I understand the intention is good but it is misguided. The result will simply be the creation of a LOT more unemployed poor people, as investment and skills migrate elsewhere.
WEALTH creates investment, which creates employment and tax revenues. If you chase the wealth away you are left with nothing but poverty. Minister Zulu and the cabinet should ask themselves some questions: “Which countries are our competitors? Where are our business owners and their wealth departing to… and why? Are our taxes too high? Is South Africa more attractive to wealthy people (who will employ others) than Mauritius, Australia, Canada, Botswana and Portugal?” Whether the cabinet like it or not, South Africa has to compete in the global economy, and if we are not competitive our people WILL become poorer, starting at the bottom. The rich are mobile. Unfortunately, we’ve been following that trajectory for a long time and unless the realisation sinks in the projection of the graph will continue.
Apparently it’s coming back in revised format because, silly us, we didn’t understand it properly.
If only we were a bit smarter the govt wouldn’t have to do stuff like this.
Zulu insults our understanding of English to cover for her incompetence. She clearly is mathematically challenged to think that this will work.
To make anyone in the ANC see reason or common sense is like asking a Jew to shout “Heil Hitler”
There is an alternative possibility to Ms. Zulu just being breathtakingly incompetent (although it is entirely possible). This may be her ‘nailing her colours to the mast’ and trying to take a more prominent position within the RET faction of the ANC. It’s possible she never expected it to go through and this is simply a political stunt