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The South African welfare state must be implemented in stages, as and when the economy allows

The South African welfare state must be implemented in stages, as and when the economy allows
A man presents a wad of bills in Cape Town, South Africa. (Photo: Leila Dougan)

To make headway in establishing a welfare state, the current government has a mammoth task, which includes rooting out state looters, establishing limited but successful SOEs and restoring trust between its social partners.

The term “welfare state” can be traced back to the idea of a guaranteed basic income, which was first mentioned in 1516. The “poor law” of 19th-century England, together with the economist John Maynard Keynes’s 1936 treatise, The General Theory of Employment, Interest and Money, and the UN’s Universal Declaration of Human Rights of 1945, was a major subsequent leap in the direction of the modern concept of the welfare state.

Today, the concept of a welfare state is not one thing, but many, all built on the same foundational principle that the wellbeing of citizens is paramount within the framework of their civil and social rights. But the idea is always changing and is still shaped by current events. The “Great Financial Crisis” of 2008, together with the economic downturn occasioned by the Covid-19 pandemic, has had a profound effect on how the welfare state is seen and how it functions.

A good practical example of this is the Fourth Industrial Revolution (4IR), which saw the rise of robotics, artificial intelligence (AI) and the Internet of Things, and which has drastically changed the nature of work. The coinciding shift to the service industry has led to rising levels of precarity among the workforces – a development that places additional pressure on the welfare system as workers struggle to adjust to the high cost of living.

The effectivity of a welfare state is especially clear in developed countries like Sweden. There, the concept can fulfil its core functions of providing solidarity, equality and equal opportunities to citizens irrespective of their socioeconomic backgrounds. It can help society thrive by acting as a “device for optimal risk sharing” and an “insurance at birth against unknowable future outcomes”, as was proposed by leading scholars.

A prerequisite for all of this, however, is an existing high level of trust in the government – and sadly this is lacking in South Africa. In current-day South Africa, where trust in the government is average at best, the highly functional Scandinavian model of a welfare state is not a one-size-fits-all. With its history of segregation and accompanied discrimination and deprivation of the majority, the question could very well be asked whether South Africa even is a welfare state. And if it is, to what extent?

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Even though the democratic state elected in 1994 inherited an extensive welfare policy, it was still skewed in favour of the previously advantaged. The emphasis of the new government was to bring about parity in social disbursements and lessen inequalities. The social policy and welfare regime that followed occurred within the macro context of transforming South African society to grow the economy for all, achieve social justice, overcome the social divisions of the past, and forge a united nation.

Read in Daily Maverick: “South Africa’s spiralling social crisis – ‘act now or watch the powder keg explode’ 

Social policies and laws were comprehensively overhauled, based on a rights-based approach to social welfare. This was in line with the progressive Constitution and strong focus on socioeconomic rights enshrined in the Bill of Rights. Many innovations in social development have been introduced, albeit in stages, and not in an encompassing, universal manner, as in the case of the Swedish social-democratic model.

The social assistance programmes established since 1994 are extensive and have a reach of more than 18 million people every month in the form of grants, old-age pensions, Covid grants, public employment generating schemes, and the “social wage”. About 10.3 million people have signed up for the R350 special Covid grant. The welfare bill now represents about 50% of all government spending of R1.1-trillion, of which roughly a quarter is distributed in cash. Formal racial discrimination when it comes to access to services no longer exists and a nationally integrated single welfare system has been created, incorporating all South Africans.

Although these efforts are admirable, South Africa still suffers from a deep malaise characterised by high levels of unemployment, poverty and inequality. Our economic problems are structural and deep-seated and require extensive and thorough surgery. No quick fixes will do.

Gaps to fill

The fact remains that a comprehensive social welfare state requires a capable government – one which can look after its citizens from cradle to grave and provide equal opportunities to all, as well as guidance to the market, while being an active participant in a competitive and growing economy.

And although South Africa is still a long way from being classified as such a state, the ANC-led government has made some strides in that direction. But the movement forward remains limited. If models like the Nordic social welfare state are used as a benchmark, the South African government still has gaps to fill.

For instance, South Africa’s education system has repeatedly delivered poor learner results by international standards. Furthermore, governments of countries considered to be social welfare states operate with near-zero incidents of corruption. There is a deep trust between social partners – government, business, labour and civil society – and an understanding that all who live and function within the country’s borders are working towards the same goal, while contributing their share of funds to the country’s welfare.

In this regard, the current South African government has a mammoth task, which includes rooting out state looters, establishing limited but successful SOEs and restoring trust between its social partners. Also, without economic growth, South Africa won’t be able to garner the fiscal ability to support the required welfare programmes.

The government’s duty in achieving this is to create ripe market conditions for the private sector to flourish. If business succeeds, it will expand, and with that comes increased employment and more tax revenue to fund welfare programmes.

Read in Daily Maverick: “Inhumane and unconstitutional economic policy ‘takes food from the mouths of children’

As part of the roadmap to developing a social welfare state in South Africa, the programmes accompanying a social welfare state must be implemented in stages, as and when the economy allows for it. It’s a parallel process, where the expansion of the economy allows for more funds to implement another welfare net. In turn, these programmes may up labour participation and increase productivity further, boosting growth and making yet more money available to support and provide services to the poor.

In South Africa, we do not have the luxury of starting with the contention that welfare services must be affordable before embarking upon its provision. Poverty and inequality are way too high and must be mitigated and reduced. The key issue is that more jobs must be urgently created, and a social accord reached between the key social partners. DM

Daryl Swanepoel is the Chief Executive Officer of the Inclusive Society Institute. This article draws from the Institute’s occasional paper assessing South Africa’s advancement towards a welfare state.


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