Poverty and unemployment remain key challenges

Although South Africa has made some impressive gains since the end of apartheid 10 years ago, widespread poverty and the growing gap between the rich and poor continue to hamper social development, says the United Nations 2003 Human Development Report. The South African leg of the report, prepared by the UN Development Programme (UNDP), was launched on Wednesday in the financial hub of the country, Johannesburg. UNDP noted that while absolute poverty had declined, with the percentage of people living below the national poverty line falling from 51.1 percent in 1995 to 48.5 percent in 2002, close to 22 million South Africans were still considered poor. The report also confirmed that the Human Development Index (HDI) for the country had also moved down from 0.73 in 1995 to 0.67 in 2003. The HDI is a composite measure of average achievement in three basic dimensions of human development: a long and healthy life, education and a decent standard of living. UNDP resident representative, John Ohiorhenuan, attributed the decline to deteriorating life expectancy, noting during his comments at the launch that South Africa remained one of the most unequal societies globally, and that inequality had "worsened within all racial classifications". Despite an overall growing discrepancy, in 2001 the average income of a white household was six times that of a black household. ACCESS TO SOCIAL SAFETY NETS While the report commended government's efforts to widen economic opportunities for the poor, sustained poverty reduction could be achieved by increasing support to the vulnerable through social safety nets and raising personal incomes. "Given the high percentage of the population living below the national poverty line, South Africa's social assistance system of grants is an especially important aspect of addressing income poverty," the report observed. However, just 30 percent of the poor were eligible to receive government payments in 2002. "This implied that if there were to have been a full take-up of grants, more than 15 million poor people fell outside the social security support system," the report noted. More people could benefit from the grants if child support programmes were extended to poor children between the ages 9 and 18 years. Furthermore, greater effort should be made to expand social security, in order to provide income to poor adults. The report also suggested that the value of social grants be increased in the medium term. HIV/AIDS had contributed to the sharp increase in poverty and the epidemic had generated a "new poverty", with more people unemployed due to the impact of the virus. The country has one of the highest HIV infection rates in sub-Saharan Africa. Researchers found that providing affordable, quality social services to the poor remained a key challenge, but access to existing services had become increasingly "precarious". Recent statistics showed that the number of households considered as being "deprived of access to 'good' quality basic services" had increased from 5.68 million to 7.24 million between the 1996 and 2001 censuses, with inadequate service delivery mainly due to the lack of resources and unclear policies. The report argued that the South African economy had at its disposal the resources and institutional structures to adopt a more aggressive approach to the provision of support to service sectors. "Such support requires a lot of 'thinking outside of the box', and must include the commitment of greater financial and human resources than is the case at present." ENVIRONMENTAL SUSTAINABILITY Like other developing countries, South Africa faced the considerable challenge of achieving economic growth and poverty alleviation without environmental degradation. The constitution had included provisions to protect the environment, but "the relationship between socioeconomic goals and the environment is not fully understood at all levels of government", the report said. Increased awareness, further capacity building, and including the costs of degradation in expenditure decisions were among the steps the authorities could take to ensure that environmental concerns were considered when implementing economic decisions. UNEMPLOYMENT - A KEY CONCERN An overarching concern raised by researchers was unemployment, which continued to rise unabated. Between 1995 and 2002, the official unemployment rate increased from 16.4 percent to 30.5 percent, while unemployment among women reached 35 percent, compared to 27 percent for males. Among black people, unemployment in 2002 was 36.8 percent compared to 14.1 for others. One of the reasons for high unemployment was the current overemphasis on capital-intensive methods of production. The report argued that for South Africa to achieve its sustainable development potential, it should consider a reorientation of the economy. This would mean, for example, changing the labour market structure from its historical exclusionary basis to one that specifically provided incentives for labour-absorbing modes of production. Public works could provide a short-term employment solution, but industrial policy should also aim to increase labour intensity of production through the withdrawal of explicit or implicit subsidies that favoured capital-intensive or large-scale enterprises. Business should be given differential tax incentives to encourage developmentally oriented investment. The report concluded that policy changes required strategic political interventions. For the full report: www.undp.org.za