South Africa's experience in employment and poverty mirrors a challenge faced by most developing countries: how to look after growing numbers of informal workers while enforcing neo-liberal economic policies.
Poverty and unemployment are the indivisible effects of processes of marginalisation and exclusion throughout the world. They are symptoms of an unequal distribution of resources both within countries and between nations. While this is not a new phenomenon, what has changed is that developing countries are increasingly faced with seemingly contradictory positions from the developed world.
We increasingly have to cheapen our labour and lower labour protection, reduce our social spending, mirror the fiscal policies of developed countries and lower protective trade barriers. But at the same time we receive goodwill statements of commitment by developed countries to increasing their foreign aid to – amongst other goals – ensure the halving of poverty by 2015.
South Africa is a clear case in point. An upper-middle-income developing country, South Africa is intent on increasing its current 4.5 per cent annual GDP growth rate to six per cent by 2010.
While South Africa is beginning to see a slight increase in jobs, the majority of these jobs are in the informal economy, especially in the trade and construction sectors. However, according to the national Labour Force Survey (September 2005), most of the jobs in the informal economy would not qualify as what the International Labour Organization (ILO) terms "decent work" in terms of remuneration alone.
These workers are clearly not going to be able to work themselves out of poverty from their incomes.
On average, formal workers' wages fell between one third and a half in real terms between 1994 and 2002. Despite a clear increase in the productivity of labour, workers' incomes have lost about half of their purchasing power. Over the same period we have seen a marked shift in the distribution of national income from wages to profits. Despite the neo-liberal assurance of the ability of the market to look after the interests of workers, business is clearly not in the business of protecting workers' rights.
Traditionally, the improvement of workers rights has been won by organised trade unions. Through the threat of the withholding of labour, trade unions have managed to win victories around working hours, conditions on the factory floor, access to benefits and collective bargaining rights around wage negotiations. However, currently, unions internationally are challenged with how to address workers needs in the age of casualised employment and informal work.
The largest trade union federation in South Africa, the Congress of South African Trade Unions (COSATU) forms part of a tripartite alliance together with its former liberation allies, the African National Congress (the ruling ANC party) and the South African Communist Party (SACP).
For many, the first blow to the alliance came with the adoption in 1996 of the Growth, Employment and Redistribution (GEAR) policy that had been drafted without any consultation with the partners by a team of twelve economists, including a number of World Bank advisors. For the next five years, both COSATU and the SACP would be caught up on trying to fight against the conservative fiscal and monetary policies, as well as the cuts made in public sector employment, and the overall reduction in government spending.
The adoption of GEAR in such a fashion dictated from early on that the federation would have to align itself with broader civil society organisations in order to address the soaring levels of unemployment and rising levels of poverty. Accordingly, together with the South African NGO Coalition (SANGOCO) and the South African Council of Churches (SACC), COSATU formed the People's Budget Campaign in 1998-89 to build viable pro-poor economic policy recommendations around which the organisations were able to lobby and campaign in the general public as well as directly with government.
Likewise, the federation was a joint founder of the Basic Income Grant Campaign, which is a broad based civil society organisation campaigning for the introduction for a universal income grant for everybody in South Africa in order to address poverty and hunger.
With regard to organising informal workers, various strategies have emerged. Some trade unionists believe that unionists should first ensure that all formal workers are organised before considering how to organise informal workers. Organising informal workers is a complex issue. Many are self-employed, or actually employ a number of workers themselves. Their battles are not with bosses, but with local government by-laws. In addition, from an organisers' perspective, it is easier to sign up a factory of 200 workers than to organise small groups of disparate hawkers, let alone home-based workers.
The most obvious approach available to the state in a relatively wealthy country such as South Africa would be to introduce a comprehensive package of social protection funded by the existing progressive income tax system to address the needs of those marginalised by the current structure of the economy.
South Africa currently has a means-tested child support grant, old age pension and disability grant. This system, however, fails to address the needs of poor people between the ages of 14 and 60 (65 for men).
Unfortunately the state continues to hold fast to an ideology that insists that the role of the state should not be to provide income support, but to encourage people to find their own incomes. While no one disputes the value of full employment based on decent jobs, what is to be done until this is achieved?
The South African government has a highly ambivalent position on its social assistance programme. The government at one and the same time rejects social spending as being unaffordable consumptive spending, but also proudly hails its social assistance programme (which currently provides some form of assistance to just over 10 million people per month) as its most effective poverty eradication programme.
When a basic income grant was first mooted by COSATU in 1998, the government was still in the heyday of the neo-liberal economic GEAR policy, which introduced widespread reductions in government expenditure, believing that a lean state was acceptable given that investment and job creation would be market-led. At this stage concerns were raised by the ANC that if the government were to provide support for poor people, this would dissuade them from taking up jobs. Since then poverty and unemployment and inequality have risen, and the government has been forced to adopt a more expansionary fiscal policy.
The government's general increase in state spending and investment, coupled with ongoing tax cuts, gives voice to the lie that the country could not afford to introduce a comprehensive social protection. It would be the most direct and effective intervention among many failed attempts to generate jobs for the poor. Yet the reluctance persists, and rather than extending the coverage of social assistance to poor people of working age, the government is rolling out, at huge cost, an Expanded Public Works Programme that provides a maximum of six months' paid work for people on road construction and building projects. Even though research has shown that most of the money in these programmes goes to middle parties and that the skills acquired in the six-month jobs are of little value to poor people, the government continues to put money into this programme. The idea is clear: the government will give a small leg up to those who demonstrate a commitment to work – the 'deserving' rather than the 'undeserving' poor of Victorian sentiments.
The recent history of South Africa since its attainment of democratic rule in 1994 is a stark illustration of the enormity of the challenge facing developing countries in the development of decent jobs to end poverty. As an upper-middle-income country, South Africa has the resources to ensure a concerted investment in the creation of decent jobs. Governed by a progressive liberation movement, many believed that the needs of the poor majority would be prioritised in policy as well as in declaration.
Yet what has emerged instead is a steady increase in poverty, unemployment and inequality. The government has been influenced by the threat that domestic and foreign capital will disinvest unless conditions for profits and returns remain guaranteed, which has resulted in 'jobless' economic growth.
What labour movements have not managed to do is to address the rising proportion of informal workers among the numbers of the employed. They need to accept the challenge of working to support the organisation of informal workers, and the building of national and international networks among these organisations. Protecting the most vulnerable jobs will in turn improve more formalised jobs, but to allow the ongoing degradation of jobs and working conditions for informal workers will have a knock-on effect and will erode the hard won protection of workers in more formal employment.
Isobel Frye is a senior researcher for the Poverty Eradication and Socio-Economic Rights at the National Labour and Economic Development Institute (NALEDI).