Executive Summary: Global innovations in social security and labour market activation policies

The COVID-19 pandemic shone the spotlight on the importance of proactive investments in building
comprehensive and resilient social security systems that are responsive to exogenous shocks (Bowen
et al., 2020). It also highlighted the important role of response machanisms for a state in crisis.
Using empirical evidence SPI conducted a study looking at the advantages inclusive social security
programs and labour market activation strategies can have on economic activity. South Africa’s
labour market, like many other countries, was deeply devastated by the pandemic. The high
unemployment rates of the country pre-pandemic meant the impact of the pandemic on our already
stressed labour markets would be severe.

Globally social protection measures are important tools that assist enterprises and workers by
granting the access to healthcare services, education and at times access to income to supplement
temporary income losses. This prevents living standards from plummeting, they assist in the retention
of the labour force by supplementing the incomes of workers in companies that are impacted by the
crisis (ILO, 2020).

In this study, SPI tracked and monitored policy innovations that had the potential to minimise the
impact of losses in hours worked, reduction in the numbers of unemployment and discouraged
workers because of the COVID-19 pandemic. The study looked at both standard and non-standard
workers. Policies that proved effective across the comparative country studies in Africa, Americas,
Arab States, Asia Pacific, and Europe had a wider coverage rate in terms of their social security
policies. The policies were well integrated into wider fiscal and monetary macroeconomic policies.
Successful Policies were implemented as a national system (universal in nature) which had the effect
of increasing coverage. Most of the policies studied relied on a contributary funding mechanism
where people directly contribute to the scheme, or took the form of instruments with direct impacts on
the labour market.

South Africa took the lead in Southern Africa by introducing the SRD R350 grant targeted at the
unemployed, those in precarious work and those in the informal sector. While this was a measure to
curb the impacts of the pandemic on the labour force, it also acknowledged the need to address long
standing issues of inequality and unemployment in order to craft a sustainable economic recovery
plan to be the bedrock of future economic plans for the country. While this policy filled the gaps and
met the coverage aspects of an effective social security system the amount proved to be too low to
have real economic impact, evident by the persistent unemployment rate post the introduction of this
measure. This also meant the program fell short on its ability to be inclusive by offering real
wage/income gains for those on the program. In South Africa the COVID-19 social security plan
focused primarily on the unemployed while other stimulus packages around the globe focused on
enterprises. In the Americas cash transfers focused on developing new income protection programs
for informal workers and their families and increasing incomes of the most vulnerable households.
Consistent among all the countries is that measures introduced were not ambitious enough to move
either household, the informal sector and all the vulnerable groups beyond the poverty line. Poverty is
too often seen as a lifestyle choice and therefore no real interest in eradicating it.

However, after running many scenarios, the Social Policy Initiative advocates for the implementation
of a Universal Basic Income for all South Africans at the value of R1500 per person per month. This bold
policy program would eliminate poverty in three years and turn it South Africa into a poverty museum.

Author: Amahle Ngwenya