Achievements and Challenges of Social Assistance-Based Social Protection: The case of South Africa

Transcription

1 Achievements and Challenges of Social Assistance-Based Social Protection: The case of South Africa Ken Harttgen, Stephan Klasen University of Göttingen Ingrid Woolard, University of Cape Town ABCDE Conference, Paris, May 31,

2 Background Apartheid South Africa bequeathed a distorted social protection system: Well-developed formal sector-based social insurance system (health, pensions, unemployment), mainly benefitting white population; For those outside of formal sector: social assistance programs: poor white problem Comprehensive including social pensions, child maintenance grants, disability grants; De-racialization of non contributory social pensions under last apartheid government (during transition); Phase-in of means tested child grant since late 1990s, continuation of disability grants; Some phase-in of better health access to public health care system (mainly for primary health care, children, and mothers) 2

3 Figure 2 Monthly value of pension benefits, by race, (constant 2010 PPP$ prices) Equalization of benefit plus equalization of effective access. 3

4 Coverage Large and comprehensive system of means-tested unconditional grants-based social protection; Covering some 50% of households, reaching most of the poor and vulnerable, size of transfer large; Clear racial pattern: Whites largely within social insurance system, Blacks covered by social assistance; Pattern mostly driven by very slow formal sector wage growth and very high unemployment (effectively keeping many Africans out of employment); 4

5 Table 3: Medical aid coverage by population group and sex Population group Covered Not covered Total without unspecified Total with unspecified Total Black African Coloured Indian/Asian White Source: Statistics South Africa (2009). Table 4: Share of households receiving grants by race 2008 OAP DG CSG African Coloured Indian/Asian White Total

6 Table 7: Value of the grants in 2010 Grant type 2010 value in Rands (and PPP$) per month Grant value as percentage of median per capita income* Old Age Pension R1080 (PPP$230) 175% Disability Grant R1080 (PPP$230) 175% Child Support Grant R250 (PPP$53) 40% Foster Care Grant R710 (PPP$150) 115% 6

7 Effects Large source of income of poorest quintiles; reduces poverty (statically); Administratively feasible in SA context (but not cheap! $40-50 delivery costs per year per recipient); Few (if any) direct disincentive effects; Focused on inactive; May reduce effective labor supply (but hardly the main reason for high unemployment); Fertility effects understudied (but unlikely to be large) Politically expedient: Deserving poor; Income support while unemployment and health crisis remain unsolved; 7

8 Figure 5: Sources of household income, by quintile Source: NIDS,

9 Affordability Costs of grants: 3.5% of GDP; All tax-financed (tax/gdp ratio: 27% and rising, mostly due to better collection); Long-term affordability: Pension burden will rise, but child grant burden will fall; total burden stable; Option to let benefits erode in real terms (annual inflation of 5%); Option to raise retirement age (currently 60); No visible threat to sustainability! 9

10 Problems with Social Protection System in SA Displacing progress on Social Insurance? Virtually no progress since 1994 except poor quality, rationed by queing free primary health care; Health access remains uneven, low access, and high costs; No progress on extending employer-based or other forms of contributory pension schemes; Little progress on support for unemployed (unemployment insurance, training, labor market policies, etc.) (plus: education system remains poor SA doing worse than Kenya, Botswana and Mozambique in test scores!); Crowding-out issue: Esp. With regard to contributory -pensions? Political crowding-out: welfare policies versus growth and employment policies? No obious transition strategy from social assistance to social insurance; 10

11 Lessons for other SSA Countries? In principle, attractive for poor countries who face similar problems High social protection needs (due to high poverty, illness, unemployment and other vulnerabilities); Politically expedient and quick results for the poor: Cash transfer system easier to implement than difficult health and education reforms to improve access and quality? Esp. Old age pensions fairly straight-forward to implement and can have good targeting and poverty performance (Lesotho, Botswana, Namibia); South African system cannot be emulated fully in poor countries: Fiscal Costs; Lower tax base; Donor funding unreliable; But reallocations (from education and health)? Need to carefully compare comparative effectiveness! Administrative capacity and costs; Programs don t fall from heaven: need domestic constituency! Feasible and affordable to start with one element (e.g. Old- Age pensions); 11

12 Table 1: ILO Basic Social Security and Fiscal Realities in Sub Saharan African Countries Universal pensions Basic health care Child benefit Estimated costs of basic social security as percentage of GDP (2008) Social assistance/em ployment scheme Admin. costs, cash transfers (ILO) Admin. costs per capita (current USD, ILO) Alternative 1 Admin. costs (current USD) Alternative 2 Admin. costs (current US$) GNI per capita (current USD) ODA 2006 Tax 2006 Estimated basic social protection expenditure 2010 Total Burkina Faso Cameroon * Ethiopia * Guinea n.a Kenya Senegal * Tanzania n.a Social Protection plus health spending, latest year

13 Focus on Affordability Issues Reference point: ILO basic social security floor; Social pensions, child benefit, disability support, social assistence/unemployment support, basic health care, Our assessment: Assessment of costs of basic social security floor suggests higher costs than ILO (esp. Administrative costs in low income countries, also health?); Some programs quite difficult to implement (esp. Disability, unemployment, and child benefit); targeting issues; Relative to existing spending, full package out of reach for many Sub-Saharan African countries; But: Progressive implementation of aspects of social security floor feasible and affordable: Beginning with social pensions and/or public works; Free health care similarly a possiibility; Expansion of domestic resource base critical! Tax base expansion feasible; Donor support useful.