What we can do to stop SA catching fire

2016-12-04 06:07
Joel Netshitenzhe

Joel Netshitenzhe

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Common sense dictates that inequality is bad for social cohesion, plus it is morally reprehensible.

But beyond sense and sensibility, societal wellbeing, in terms of drug use, mental illness, life expectancy, teenage births, violence and prison population, is worse in more unequal societies – affecting rich and poor countries alike.

It is an equal-opportunity disease.

Inequality also affects the length of economic growth spells.

According to an International Monetary Fund discussion note, what separates growth miracles from laggards is the ability to sustain growth.

Longer growth spells are robustly associated with more equality in income distribution.

What have been some of the trends in South Africa since 1994?

. Income poverty has been declining since the advent of democracy.

. Functional distribution of national income has worsened, and with it, income inequality.

. The change in the share of national income has not favoured the middle class, even though their proportion of the population has increased.

. Being employed does not, on its own, guarantee an escape from poverty.

. The inequality measures show a declining trend between races, while it has shown a rising trend within races – particularly among black people.

. Inequality has had implications for social cohesion.

Dealing with the inequality disease

The first intervention required to deal with inequality is pro-poor growth and pro-growth poverty reduction.

This must focus on sectors with comparative advantages and fiscal measures for young people and women.

The rich are better able to take advantage of growth and also benefit from improving value of existing assets.

In the years of high growth (2003 to 2008), the unemployment rate was reduced from 31% to 23%, but inequality still increased.

Education and skills training need to be coupled with growth strategies, otherwise we will end up living with the educated poor.

Additional measures to the income policy and minimum wage must be considered to limit wage differentials.

Share-ownership plans and profit-sharing schemes should be emphasised, but must go along with appropriate representation, financial education and trust-building.

There must also be a reduction in the cost of living for the poor – targeting the price of basic necessities, spatial planning and better social security.

What has also emerged from studies is that provision of services can lose its value in the eyes of recipients if the income issue is not addressed.

For instance, unemployed recipients of electricity only use it for lighting and even then they cannot afford the bills.

Some beneficiaries of subsidised houses rent them out and go back to living in shacks.

You can have a situation in which poor water provision, for instance, perpetuates poverty and inequality in the form of diseases – thus discounting the improved income.

The destruction of hope

The South African polity is essentially a stable one, with the Constitution accepted across the board as the broad framework for the regulation of sociopolitical relations.

The overriding trend arising from the 2014 elections is that about 93% of those who voted supported parties that embrace the National Development Plan (NDP).

Even though there has been progress in addressing poverty and providing basic social services, inequality has not declined.

The reality arising from this is that, since 1994, South Africa has been in a delicate balancing act of preventing the flammable social tinder of poverty and inequality from catching fire.

Besides social delivery and the base effects of movement of many black people into the middle strata, hope was the stock-in-trade.

Poor state performance and corruption are destroying that hope.

It is unavoidable that when there is a sense of repetitive poor management of allegations of corruption within high leadership echelons, the legitimacy of the state and the polity gets undermined.

Combined with weak capacity of state institutions, these developments can result in a situation in which the state as a whole starts progressively to lose the confidence of the people.

The hope that prevents South Africa’s social tinder from catching fire can thus dissipate.

If South Africa has to prevent the social tinder from catching fire, it needs a turnaround in terms of inclusive economic growth, efficiency and effectiveness of “social delivery”, and matters of ethics in government and across society.

A silver lining

We need to avoid a reductionist approach in relation to the dynamic between social cohesion and social compacting on the one hand, and attending to the material issues facing society on the other.

We can’t wait for material issues to be addressed before the country attains social cohesion.

We need a minimal level of social cohesion to compact and move towards the NDP’s Vision 2030.

Perhaps, in the midst of the dark cloud attached to shenanigans in the political arena and the threat of ratings downgrades, there is a silver lining reflected in cooperation between government, business and labour: from minimum wage to strike balloting to agreements in business working group.

This may be the beginning of something significant: the activation of combined social agency.

This is Netshitenzhe’s edited speech as part of the Mapungubwe Institute for Strategic Reflection delivered at the Social Cohesion Policy Dialogue in partnership with the Department of Planning, Monitoring and Evaluation

Read more on:    international monetary fund  |  inequality

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