Social Security discussion – high-sounding rhetoric or subject for reform?
- Fatima Vawda
- 17 May 2017 (South Africa)
The last package of reforms last emerged in the form of a discussion document entitled “Comprehensive social security reform in South Africa” published in 2012.
The motive then, and even now, is that the existing framework it is too fragmented and riddled with inequalities that do not address the deep-rooted social and economic disparities in the country. However, other than the endless discussion and policy documents that such dialogues have engendered, there has been no political will to bring about tangible reforms to the current regime. That simply goes to give credence to the assertion that the lengthy “peaceful” period in the social security system meant that there was no urgency on the part of government to reconsider the current regime. In fact, until the recent Sassa saga, social security was not a priority on the government’s agenda. One would have thought that the recent events in the department would have galvanised the government to revisit the provision of social security but government appears to be engrossed in issues ranging from internal squabbles in the ruling party as well as seeking to redress threats to its sovereign rating.
Much as most of the 2012 discussion document can be commended for suggesting a comprehensive design to the system, sadly five years later it still remains nothing but a high-sounding discussion document. It is riddled with a number of severe gaps and one without any hope of attaining its intended outcomes. In fact, the proposed framework contained in the document does not amount to a harbinger of radical change to the system; and critics would be forgiven for characterising the discussion document as a mere rehash of the unsatisfactory regime.
Flaws include the fact that it does not propose fundamental changes to the core issues that would create a more effective social security regime. Its administrative context is unclear. For instance, it is not clear who will run it. Is it the National Treasury or Department of Social Services? Likewise, the proposed reforms do nothing to show how to deal with the continuum between two contrasting poles: the market ideology and the social contract ideology in the provision of social security in the country. A crucial consideration the drafters of the discussion document overlooked is the realism that predicated that at the heart of the social security reform debate are economic and social value judgements. By overlooking that fact, the document fails to shed light on whether the proposed regime will be guided by the need to address economic conditions of the beneficiaries or whether the reforms will be based on market ideals such as national savings, privatisation of government programmes, economic expansion and personal wealth. It should be noted that the profit element embedded in such market ideals or values have always proved to be in conflict with powerful political forces and policies aimed at advancing social objectives. Clarity is needed especially in view of the fact that the legitimacy of the proposed reforms can only generate societal consensus if they are seen to be addressing broader social and economic objectives. Unfortunately the discussion document does nothing to address those issues in that debate.
Further, the 2012 discussion document disregards the broader social history of South Africa. In other words it is not tied to transforming the highly concentrated asset management industry. This is a major omission because that weakness destroys the very fabric of the Constitution upon which social justice is steeped. As it is crafted, it does not address issues that other sectors such as the banking industry are grappling with; mainly the inequality between the long-established and hugely capitalised firms and the smaller ones. As such, the current discourse does not speak to proposals on how increased and meaningful levels of economic participation in the sector – especially by smaller asset management firms – can be achieved.
Sadly, the proposed twin peaks supervisory model is also quiet on the issue of formulating systematic ways of levelling the playing field of the asset management industry which administers social security. The proposed reforms do not address institutional fragmentation, they do nothing to stimulate the much needed disruption of the status quo; firms that are currently managing social security assets will not change. Large asset management firms such as Old Mutual and Sanlam are only going to get bigger and the smaller companies whose stake in the sector is less than 5% will continue to be disempowered. There is therefore need for the discussion document to propose strategies of ensuring that small business come out and form part of the implementation process.
In all other sectors the role of regulation has been a crucial instrument in heightening the pace and rate of growth of transformation. Unfortunately the 2012 document misses out on suggesting a regulatory framework which would create linkages between the agenda for the attainment of social security objectives and its actual implementation. It has been argued that the current regulatory environment works in a haphazard fashion; it is not based on the planned implementation and continuous evaluation of a comprehensive welfare policy but rather, is only felt works in partial and ad hoc reactions to different needs at different times. Likewise, legislation is unclear in terms of policy guidelines on issues such as the values and principles underlying welfare services or governmental responsibilities in terms of the Constitution.
The issue of unclaimed benefits has plagued many nations. In South Africa, the irony is that while several ex-employees, especially migrant workers languish in poverty for want of access to their social and security benefits, billions of rands in the form of retirement-type funds remain unclaimed and are stashed in fund managers’ accounts. Also affected are those migrant workers who are retrenched or discharged on health reasons. Accessing compensation in such cases is always a nightmare. Discussions around social security reform provided an ample platform on which this subject should have been deliberated. The fact that no emphasis was placed on crafting a strategy aimed at resolving this issue simply goes to demonstrate that this issue was not prioritised.
It is clear therefore that discourse around the reform of the social security system has been beleaguered not only with lack of significant structural and institutional clarity but also from the absence of political will. There is no hope that such reform will see the light of any time soon. The existing lack of synergy and infighting between the ANC government and its labour ally, Cosatu – which advocated for and was voice of the reform agenda — means that there is no effective champion of the comprehensive social security system. For as long as the discussion document is not intrinsically linked to ideological, historical, economic, political and social milieu, for as long as it is not re-aligned to the need to “democratise” the system, discourse around social security reform will not garner the confidence of the interested parties. DM
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