- The economic contraction will have implications for jobs, and compromising livelihoods, particularly the vulnerable.
- Government's special Covid-19 grant is aimed at supporting those in the informal sector, but asylum seekers and undocumented persons are among those who are not covered.
- The Scalibrini Centre has launched a court application to get these marginalised groups the financial assistance they need.
- There is a view that the Covid-19 pandemic warrants the development of a more inclusive economy, but we can't wait any longer.
It could take as long as five years for the SA economy to recover to pre Covid-19 levels, several analysts predict. The economy is projected to contract between 7% and 10% due to the impact of the lockdown. In the meantime, people will suffer job losses, with Treasury projecting as many as 1.8 million in a worst-case scenario.
Being able to recover these jobs depends on how quickly growth can return to 2019 levels, according to FNB economist Siphamandla Mkhwanazi. During a webinar this week, he explained that the reopening of the economy is helping to gain some ground as productivity resumes. But job recoveries will also depend on changes in household behaviour, and future strategies of corporates.
For example, there is a risk of manufacturers opting for automation instead of physical labour and households might change their spending behaviour – preferring not to go out for entertainment – which would impact demand, he said.
According to Martin Kingston, Business for South Africa's economic working group head, the solution to inequality, poverty and job losses which have been amplified by Covid-19, is economic growth. "Economic growth is extremely difficult in a lockdown environment – as seen globally and not just in South Africa," he said.
The country's lockdown has been described among one of the harshest in the world, with only essential service providers such as health workers and staff of grocery stores, among others being able to work for the first five weeks. Since 1 June, most sectors such as retail, mining and manufacturing, have been allowed to become fully operational, while service providers which require human interaction such as the hospitality industry, restaurants and even hairdressers have been barred from trading.
Despite the negative impact on the economy, Kingston said it was not a "mistake" to implement the lockdown, in order to establish a "primary line of defence" by building capacity in the healthcare sector, procuring required personal protective equipment and ironing out safety procedures to be followed society-wide.
The "second line of defence" involves not getting into a "lives versus livelihoods discussion", because that would "magnify" inequality, unemployment and poverty, said Kingston. The vulnerable in society are most likely to be at risk – not just to Covid-19, but to existing co-morbidities and even malnutrition, he added.
Kingston said that Covid-19 presented an opportunity for the country to unite behind an inclusive, sustainable economic recovery plan, which must be put in place now.
Those in the informal economy, who are not recipients of UIF benefits, like some domestic workers are among the vulnerable.
"The impact on informal workers has been particularly devastating since they have no cushion to fall back on, they are outside the system," said Caroline Skinner, senior researcher at the African Centre for Cities at the University of Cape Town.
A survey of just over 19 000 people by the Human Sciences Research Council, found two weeks into lockdown that more than half (55%) of residents of informal settlements had no money to buy food and the same was true for two-thirds of township residents.
"During lockdown, getting informal food distributors declared essential service workers was absolutely critical for food security," said Skinner. "Conditions are pretty dire. For the informal economy, being outside of social security net, has always been a concern," Skinner added.
Government has launched a Covid-19 grant specifically targeting informal workers who are not benefitting from any other grants. By the end of May, the South African Social Security Agency (SASSA) managed to pay out the R350, Covid-19 Social Relief of Distress grant to over 100 000 beneficiaries. The agency had received about 13 million applications for the temporary grant, of these 6.3 million were valid applications, SASSA CEO Busisiwe Memela said in a statement issued on 1 June.
Those who want to apply for the grant need documentation such as an ID number, or department of home affairs permit, a bank account and proof of residential address. This means there is still an exclusionary effect to the grant, Skinner said.
Undocumented persons (both citizens and non-citizens) are among those who would fall through the cracks.
"The eligibility requirements in terms of persons who can apply, does leave out some people – namely, asylum seekers, migrants and undocumented persons," said Sally Gandar, head of advocacy and legal advisor of the Scalabrini Centre of Cape Town. "In order for everyone in South Africa to be safe, we have to ensure that the response to the pandemic is as inclusive as possible and does not leave vulnerable segments of our society behind," Gandar said.
The Scalabrini Centre has launched a court application against government, which will be heard on 17 June. It seeks to broaden the access of the Covid-19 grant to asylum seekers and special permit holders.
"These people are in the same position as permanent residents and recognised refugees – they are subject to the lockdown in South Africa, cannot travel, and for the most part, cannot work. Many cannot provide for their most basic needs and those of their families," the founding affidavit read. According to the centre, their exclusion from accessing the grant is "arbitrary, irrational and unreasonable". "It violates the constitutional rights of asylum seekers and special permit holders to equality, dignity and access to social security," the affidavit read.
Many non-governmental organisations and some communities have stepped up to support vulnerable groups by distributing food parcels during this time.
To further help the situation, Gandar said that if people know decision-makers, they should write to these representatives calling for inclusive responses to the pandemic. "Reach out to vulnerable people in your community or neighbourhood. Check in with them and see if they're doing okay, and try to help them if you have the resources. This could be through connecting them to places with resources, or simply helping them yourself," Gandar said.
She also encouraged individuals to support organisations assisting those in need, including their local Community Action Network, or to set up one if it does not yet exist.
When asked if there is a risk of social unrest, with people unable to earn an income for a prolonged period of lockdown, Gandar said this is not unique to South Africa. "Any country could face this type of risk where large amounts of its population have no income or access to basic necessities, South Africa is no different," she said.
Social unrest would likely have a disproportionate impact on non-citizens, she said. "This is something that we are concerned about."
Political science professor at the University of Stellenbosch, Amanda Gouws said that the risk of social unrest remains even if people are limited from moving around, it depends on how "desperate" people will get. "People are already making noises about UIF not paying out, and all kinds of problems," she said.
Gouws, like many others, noted that Covid-19 could be a chance to address poverty and inequality in society, however it required "political will". Government has provided water to areas in need, as well as improving hospitals, during lockdown - which has shown these issues can be addressed if there is political will, she explained.
Gouws said there is a need for empathy toward those who are struggling, who are hungry and who have lost their jobs. "As a nation apartheid divided us so much. There has always been divisions, but because this disease touches us as all, we need to think of each other as one big community and [develop] a sense of nationhood," she said.
Skinner shared views that moments of crisis also present opportunities, for example getting domestic workers into the UIF system. "It is a critical moment. There is an opportunity to address long-standing disparities."
Commenting on government's R500 billion fiscal stimulus, Skinner said that it is important to make sure money is dispersed in a way that it is put in the hands of the poor, who in turn spend on local goods and services, resulting in a more inclusive economic trajectory.