The global economic crisis and child well being in South Africa: summary results George Laryea Adjei, UNICEF Ramos Mabugu, FFC Thabani Buthelezi, DSD 15 August 2011
Issues covered here: Introduction South Africa s child poverty profile CSG as major instrument to combat child poverty; Findings from macro and micro economic simulation about how the effects of the economic recession are mediated through the Child Support Grant Findings from qualitative study about effects of the crisis, Conclusions about strengthening the poverty reduction as well as buffer roles of the CSG and other social protection instruments
BACKGROUND
Background (I) The world is recovering from the deepest and most serious economic crisis since the Great Depression. South Africa s strong links to the world economy meant a sharp fall in demand for our exports and in prices of key export commodities. South African economy contracted by almost two percent during 2009. About a million jobs were lost in 2009 alone. There were also adverse implications for investment, incomes and poverty
Annualised % change in the seasonally adjusted quarterly GDP at constant 2005 Prices 6.0 4.0 4.7 2.9 3.1 2.0 0.9 0.9 0.0 2.0 2008:Q1 2008:Q2 2008:Q3 2008:Q4 2009:Q1 2009:Q2 2009:Q3 2009:Q4 1.8 2.8 4.0 6.0 5.9 8.0 Source: StatsSA GDP database, 2011
Quarter to quarter change in employment, quarter 1: 2008 to quarter 2: 2011 Source: StatsSA LFS database, 2011
Background (II) The Government of South Africa responded to the crisis on several fronts: avoiding the risk of unfairly placing the burden of the downturn on the poor and vulnerable strengthening the capacity of the economy to grow and create decent jobs maintaining the planned high levels of investment in public sector infrastructure encouraging the private sector to maintain and improve their levels of fixed direct investment the social protection system was also expected to support affected families
Background (III) Global evidence suggests that it is the existence of (robust) pre crisis policies and institutions that help countries to effectively protect the poor when major shocks occur The CSG is one such pre crisis social protection instrument. The quantitative study investigated the role of the CSG in lessening the impact of the crisis on child poverty The qualitative study sought to understand the role of other social protection instruments in the coping efforts of families
METHODS
Methods Quantitative study: macro micro simulation to isolate effects of global economic crisis Qualitative study: cross sectional survey (301 households in three provinces with heavily affected industries), focus group discussions, in depth interviews with community leaders and officials (North West, KZN and Limpopo provinces)
SA POVERTY PROFILE
SA Poverty profile Stochastic poverty dominance for most dimensions Adult equivalence scale does not much affect poverty profile Thus use per capita income at 40 th percentile as poverty line 52.9% of population poor: 65.5% of all children (12 million) Differentials larger for P 1 and P 2 thus lower poverty line would increase child adult poverty differential Poverty largest amongst youngest, blacks, rural areas, poorer provinces Reported hunger strongly declined until 2007 probably because of Child Support Grants (CSGs) and other grants (employment growth played only a small role)
SA Child poverty profile 80 71 70 60 Child poverty rate (%) 50 40 30 37 20 11 10 0 Black/African Coloured Indian White 4
Poverty profile for children and adults (poverty line at 40th percentile of household per capita income) Child poverty (0 17 years) P0 Poverty headcount rate Rate (%) Number P1 Poverty depth measure P2 Poverty severity measure Age 0 4 66.1 3 066 509 0.336 0.213 5 14 65.7 6 681 507 0.343 0.202 15 17 63.8 2 067 609 0.332 0.203 0 17 (all children) 65.5 11 822 544 0.328 0.205 18+ (all adults) 45.2 0.213 0.126 Racial group Black 72.5 11 100 826 0.375 0.232 Coloured 41.3 623 412 0.167 0.093 Asian 24.2 76 137 0.093 0.052 White 2.0 18 081 0.012 0.008 Urban/Rural location Rural 82.8 7 376 451 0.446 0.28 Urban 48.6 4 442 491 0.226 0.133
Coverage of Child Support Grant 12,000,000 10,000,000 10,336,000 8,000,000 6,000,000 4,000,000 2,000,000 0 150,366
FINDINGS
Findings from simulation exercise (I) Impact on child poverty (Po)
Trends in poverty under three scenarios BAU % change Moderate % change Severe % change 2007 P0 0.526 0.0% P1 0.205 0.0% P2 0.107 0.0% 2008 P0 0.522 0.8% 0.527 0.2% 0.549 4.4% P1 0.205 0.0% 0.230 12.2% 0.294 43.4% P2 0.106 0.9% 0.137 28.0% 0.208 94.4% 2009 P0 0.519 1.3% 0.522 0.8% 0.545 3.6% P1 0.204 0.5% 0.219 6.8% 0.304 48.3% P2 0.106 0.9% 0.125 16.8% 0.215 100.9% 2010 P0 0.519 1.3% 0.518 1.5% 0.536 1.9% P1 0.203 1.0% 0.203 1.0% 0.238 16.1% P2 0.105 1.9% 0.105 1.9% 0.145 35.5% 2011 P0 0.518 1.5% 0.518 1.5% 0.529 0.6% P1 0.201 2.0% 0.202 1.5% 0.228 11.2% P2 0.104 2.8% 0.104 2.8% 0.135 26.2%
Findings from simulation exercise (II) Economic slowdown Increasing unemployment, notably for unskilled workers Whatever the scenario, poor children are hit the most Employment effects worse, perhaps due to large wage rigidities (increasing wages in crisis) Though the economy grows after the crisis, total investment and GDP never reach their BAU values Poverty is higher than what it would have been. Without Child Support Grant, the situation would have been worse
Findings from simulation exercise (III) The economic recession disrupted the decline of child poverty in South Africa However, the gains in child poverty in past decade through CSG were only partly reversed by crisis; the major impact was among the poorest CSG reduces depth and severity of poverty before crisis CSG also served as a form of diversified income, thus making poor households less susceptible to the effect of the shock As in most countries there was little time for antipoverty policy response, so the pre crisis existence of social grants was very important
CSG reduces child poverty Child poverty with CSG 2007 9 percentage points drop in child poverty because of CSG Child poverty without CSG 2007 48% 50% 52% 54% 56% 58% 60% 62% 64%
Crisis Without CSG With CSG child poverty increased by just 2 percentage points during the crisis (2007 2009) Without CSG, child poverty would have been much higher, i.e. at the minimum a difference of about 11 percentage points (9 percentage points without CSG and without crisis plus 2 percentage points net effect of crisis) Thus the grants are in magnitude far greater than the effect of the crisis Those who lost their jobs and had not qualified for grants before the crisis may have lost out due to lag time needed to get on the grant
Evidence from qualitative study (I) Significant difference in welfare indicators between households who received state support and those who did not In addition to social grants, unemployment insurance provided a critical source of income that cushioned many Affected households who were not receiving state support were impacted more negatively by the recession more likely to cut food expenditure, transfer children to a cheaper school or lack transport money for the children to go to school, etc.
Evidence from qualitative study (II) Effects of social protection on parental care
Evidence from qualitative study (III) Effects on seeking health care
Evidence from qualitative study (IV) Effects on food consumption
CONCLUSIONS
Conclusions (I) Need for greater public awareness about social protection instruments, especially when a crisis strikes e.g. the Social Relief of Distress facility was virtually unknown by most of the households. Need to accelerate pace to reach some 2 million eligible children who are not receiving the CSG for mainly administrative reasons
Conclusions (II) Relax the means test, move towards faster universalisation of the CSG enable stronger uptake when a crisis hits and to combat persistence of vulnerability Move faster towards consolidation of various social protection instruments (CSG, FCG, UIF, social wage, etc.) as the combined effects are significant for child poverty reduction Strengthen surveillance of effects of shocks on poor families and children introduce rapid surveillance mechanisms
Conclusions (III) South Africa is a model for rest of continent and beyond on progressive social policies Consolidation of various social protection instruments should lead towards a renewed agenda for ending child poverty
George Laryea-Adjei (glaryeaadjei@unicef.org) Ramos Mabugu (ramosm@ffc.co.za) Thabani Buthelezi (ThabaniB@dsd.gov.za) THANK YOU