Government has done a lot of work in trying to reduce the incidence of poverty in the country, but structures that remain continue to create a barrier for its effective reduction.
In fact, poverty and inequality have worsened materially, with South Africa being ranked as the most unequal country in the world according to the 2018 World Bank report, Overcoming Poverty and Inequality in South Africa. An Oxfam inequality report in January this anchored these findings, reporting that the percentage of people living in poverty had increased by 11% between 2011 and 2015.
This has necessitated the growing urgency to viewing poverty in a multidimensional way, to ensure that we have a more comprehensive understanding of both the drivers as well as the remedy opportunities for poverty incidence and inequality.
Poverty has for many years been defined primarily by the money metric – how much money people survive on (or not) per month. Recent multidimensional poverty studies have found other factors, like health, education and access, physical and social isolation, lack of asset possession and access to services and feelings of vulnerability, powerlessness and helplessness as all contributing factors to the incidence of poverty. (Woolard and Leibbrandt, 1999:3; World Bank, 2000:18; Philip and Rayhan, 2004:1)
Therefore, the opportunity here is not only for companies to start paying their staff fair wages, but to also lead the work in supporting their staff with a view to mitigate the multidimensional poverty factors. I have often lamented that private sector ought to lead policy development, and government acts as an agent whose duty is to create the legislative and institutional framework for a sustainable implementation of that policy.
Wages and healthcare
Large corporates should by now have nurses that provide both preventative and remedial healthcare services at their work premises. In addition, the extent of wage inequality by race and gender as well as the concept of working poor have been broadly researched and remain parasitically prevalent in South Africa. One in four workers currently earning at the minimum wage of R3 500 are accounted for in the low-wage poverty rate.
Research from the Living Wage Foundation found that worker absenteeism dropped by as much as 25% when employees were paid a living wage. Occupational Care South Africa (OCSA) estimates that the country loses up to R16bn per year due to absenteeism, while the Human Capital Review, estimates this number slightly higher at R19bn annually.
Presenteeism (when workers come to work when they are sick but should be home trying to get well) is reported to cost the country more than four times what absenteeism costs, which means this number can go up to the region of R80bn annually.
Education, nutrition and food security
Hunger has a negative impact on employee productivity and health. Everybody loves freebies, but most actually love them because they need them. A study by the International Labour Office (ILO) found that poor diet on the job results in as much as a 20% drop in productivity.
Corporates must also undertake to prioritise education, skills development and capacity building in their staff who are currently working poor. We know that skills are particularly scarce in South Africa, and a skills investment in favour of your most vulnerable workers will go a long way in both reducing inequality and poverty incidence.
Organisations ought to do their own poverty assessment for their employees and ensure that those who are the poorest are supported out of poverty, taking a multidimensional view of the factors driving poverty in the first place.
Imagine (yes, Mr President, I am also a dreamer) the scale of the impact this kind of corporate citizenry would have on their own productivity and profitability as well as the lives of those working poor. Corporates do indeed set the tone for the policies that ultimately get developed, and this is a challenge for them to take the lead and close the development gaps born out of poverty in South Africa.
Sifiso Skenjana is founder and financial economist at AFRA Consultants. He specialises in economic policy research, investment strategy and advisory services. He is currently pursuing his PhD. Views expressed are his own.
Follow him on Twitter: @sifiso_skenjana