There is no longer room for the fat of corruption, or the waste of ineptitude.
Source: Financial Mail
The jobs reckoning is here: 3-million jobs lost
The Nids-Cram survey suggests Covid-19 has had a much greater impact on employment than expected: an estimated 3-million jobs lost, and 1.5-million employees furloughed. The jobs bloodbath traces the contours of inequality in SA and has important implications for hunger among the country’s poorer people
The coronavirus pandemic is the largest social and economic shock in our lifetime. It has fundamentally interrupted everything we do and worsened problems such as poverty, inequality and unemployment. The collateral damage of this one virus has been profound and will be with us for the next 10 years, if not longer.
Though the SA government acted swiftly and decisively to limit the spread of the virus, implementing a nationwide lockdown within seven days, its mitigation measures have come at a high cost. Never before — or at least not in the past 50 years — have we seen so much damage in such a short time. This includes damage from the lockdown, the recession and the pandemic itself. But the true scale of job loss and hunger throughout SA is difficult to fathom.
Based on the first wave of data from a survey we released this week, we estimate that 3-million South Africans lost their jobs between February and April, with 1.5-million more losing their income through being furloughed. Job losses were concentrated among women, who accounted for 2-million of the 3-million jobs lost. Almost half of all survey respondents (47%) reported that they ran out of money to buy food in April.
Over the past three months, 30 leading social science researchers have surveyed more than 7,000 South Africans from across the length and breadth of the country. Using 50 call centre agents, we conducted 20-minute telephonic surveys in 10 languages, asking respondents about their employment status, household hunger, migration and receipt of grants.
This study, the Coronavirus Rapid Mobile Survey (Cram), is the largest nonmedical Covid-19 research project under way in SA. Our sample was drawn from, and is representative of, the National Income Dynamics Study, or Nids.
Nids was a nationally representative sample of South Africans in 2008 who have been visited every few years, with follow-up surveys conducted in 2010, 2012, 2014 and 2017. Hundreds of academic papers have been written using this study.
Earlier this year we were given permission by the presidency to use the Nids sampling frame for a Nids-Cram study. Due to the operational constraints around surveying people during a pandemic, and the limitations of telephone surveys compared with in-person surveys, this latest iteration has a much shorter questionnaire and a smaller sample size than previous rounds of Nids.
While these caveats should not be brushed over, and they are readily and freely acknowledged by the researchers, we believe the trends evident in the Nids-Cram data are indicative of the underlying labour market and welfare dynamics in SA today. It is also the only broadly nationally representative survey available.
As the authors of this special report, we all agree with economist Stefan Dercon when he says: “Waiting for better data is not an option: decisions have to be made now as this risks turning into a disaster, not just for health, but also for people’s livelihoods.”
Unprecedented job losses
As the individual reports on pages 28-36 make clear, the results of the Nids-Cram survey are sobering. But two particular and related findings deserve further attention: employment and hunger.
During our survey in May and June, the Nids-Cram team asked respondents whether their household had lost their main source of income since the start of the national lockdown on March 27.
A staggering two in five respondents (40%) reported they had. This has profound consequences for welfare and hunger in SA. An underappreciated fact is that grant-receiving households also rely heavily on income earned from the labour market, not only income from grants. Gabrielle Wills and her co-authors show 39% of grant-receiving households reported that income from wages was the main source of income, compared with 70% for nongrant households.
If many people lost their jobs, were furloughed, or were locked out of their income (for example informal traders), this helps explain the sharp increase in reported hunger that we see in the survey.
So, how many people lost their income?
The survey asked respondents a number of retrospective questions about employment and income in both April and February, allowing us to compare job losses and income losses over this period.
In their paper Vimal Ranchhod and Reza Daniels find that one in three income earners in February (33%) did not earn an income in April. The weighted Nids-Cram data further shows there was an 18% decline in employment between February and April 2020.
In real numbers, the estimate is that there were 17-million people employed in February, but only 14-million in April.
In addition to the 3-million people thought to have lost their jobs, a further 1.5-million (9%) were furloughed (they received no income but reported they had a job to return to).
If these numbers are correct, the scale of job loss is unprecedented in SA.
The next important question is: who are we talking about? Who lost their jobs? Who lost their income?
Job losses were most severe for those who were already disadvantaged in the labour market. The rates of net job loss (see graph to the right) are much higher for manual labourers (-24%) than professionals (-5%); for those with verbal contracts (-22%) compared with those with written contracts (-8%); for women (-26%) compared with men (-11%); and for those with a tertiary education (-10%) against those with matric or less (-23%).
It is important to note that this data refers to net job losses — in other words, it takes account of the small percentage of people who gained jobs over this period.
In another paper, Ranchhod and Daniels look specifically at job losses among those who were employed in February, and report these losses by income and race.
This data shows black people were three times more likely to lose their jobs (28%) compared with white people (11%), and that those earning less than R3,000 a month were eight times more likely to lose their jobs (38%) than those earning more than R24,000 a month (5%).
Clearly the collateral damage of the lockdown has been felt disproportionately by the poor, who are also more likely to be in the informal sector, have lower earnings, are less educated, and are more likely to be black African.
This finding is corroborated by all the Nids-Cram research on employment.
One final trend is that this pandemic and its resultant job losses have fallen most heavily on women. Of the approximately 3-million net job losses between February and April, women accounted for 2-million, or two-thirds, of the total. Daniela Casale and Dori Posel show that in those groups of people already disadvantaged in the labour market, and who already faced a disproportionate share of job losses from the pandemic (the less educated, the poor, black Africans and informal workers), women faced even further job losses, putting them at a double disadvantage.
Given what we know now about the extent of job losses and income losses, it was inevitable that household hunger would rise. This is clearly what the data shows.
Nearly half of all respondents (47%) reported that their households ran out of money to buy food in April. This monthly figure is double the annual figure reported in Stats SA’s most recent General Household Survey. In that study, 21% of households reported running out of money to buy food at some point in the past year.
Looking at reported hunger and depth of hunger among Nids-Cram survey respondents, one in five (22%) indicated that someone in their household had gone hungry in the past week; one in eight (13%) reported frequent hunger (three or more days a week); and one in 14 (7%) reported perpetual hunger (every day or almost every day in the week).
The same questions were repeated, asking specifically about child hunger. In households with children, one in seven respondents (15%) indicated a child had gone hungry in the past week because there wasn’t enough food; one in three (8%) reported frequent child hunger (at least every other day); and one in 25 (4%) reported perpetual child hunger (child hunger every day or almost every day).
In a set of reports that makes for disturbing reading, there is also clear evidence of altruism, sacrifice and resilience within poorer households. The best example of this is the practice of “shielding”, where households report adult hunger but not child hunger. In households that experienced hunger in the past week, nearly half (42%) managed to “shield” children from that hunger, despite adults going hungry.
Where adult hunger was less than four days per week, the practice of shielding was higher (47%), but where adult hunger was perpetual (every day or almost every day), fewer households seemed able to shield their children: only 33% reported that children did not go hungry in those households.
So while many households have managed to protect or shield their children during this acute crisis, this protective capacity has its limits. Where adult hunger becomes too pervasive, households seem unable to protect their children from hunger.
While the employment losses reflect on the period from February to April — and so before the rollout of the government’s Covid-19 social relief of distress grant — the hunger questions reflect on the “past seven days”. Given that this survey was conducted in May and June, and that government grants were topped up from the beginning of May, these hunger figures were reported after households received grant top-ups (these top-ups were largest in May).
The severely delayed rollout of the Covid-19 grant and Unemployment Insurance Fund benefits to those who lost their jobs or incomes reflects the difficulty of rapidly implementing social relief. This stands in stark contrast with the rapid pace at which the lockdown was implemented.
On the one hand, the government implemented a hard lockdown swiftly and severely, deploying the army across SA within seven days of the announcement. But it took more than two months to provide any form of relief to those most affected by the crisis.
Two months after at least 4-million South Africans lost their income — 3-million from job loss; 1.5-million from furlough — only 117,000 had received the special Covid-19 social relief of distress grant, according to the official count of payouts by May 31.
Clearly the government’s ability to prevent (travel, socialising, commerce) is far greater than its ability to provide. This lopsided capacity is critical in understanding why hunger has risen to unprecedented proportions.
Knowing what we know now about the collateral damage of a nationwide lockdown, including who it affects and how it affects them, as well as knowing what we know now about the government’s administrative and financial capacities to provide, we should exercise extreme caution before again implementing a nationwide lockdown.
While we can all acknowledge that the great uncertainty around the pandemic justified the lockdown (at least initially), future mitigation measures, such as implementing social distancing, will have to be found and pursued with greater vigour.
Preventing Covid-19 deaths should be a top priority — but not “at any cost”.
What is to be done?
Investment guru Warren Buffett famously said: “It’s only when the tide goes out that you realise who’s been swimming naked.”
This refers to liquidity positions when there is a run on a bank or a financial crisis, but it is equally applicable here. It is in times of crisis that we are able to see the true nature of things — in this case, the true nature of SA society.
We’ve always known that there are large inequalities between the rich and the poor, and that these inequalities are heavily determined by the colour of one’s skin, one’s place of birth and the wealth of one’s parents. All of that has now, uncomfortably, been laid bare.
The pandemic has forced on us the unwelcome realisation, articulated elsewhere by American writer Anand Giridharadas, that “Your health is as safe as that of the worst-insured, worst-cared-for person in your society. It will be decided by the height of the floor, not the ceiling.”
We know that one of the true measures of a country is whether it can provide basic dignity for all who live in it. In SA, this means enough food to eat, warm, running water in a safe and dignified shelter, and access to essential health care and basic education.
This is not the ceiling of our aspirations — which might include, for example, meaningful employment, higher education, art and cultural production — but the floor of our obligations to each other as citizens of the same country.
Which brings us back to inequality. Three months ago, an important analysis of SA tax data by Aroop Chatterjee, Léo Czajka and Amory Gethin showed that the richest 10% of South Africans own 86% of all wealth, and the richest 1% own more than half of it (55%). The richest 3,500 individuals alone own more wealth than the poorest 32-million people in the country (the poorest 90%).
This is all strongly racialised. White South Africans make up the majority (60%) of the richest 10%. One doesn’t have to be a statistician to do the maths; white South Africans own at least half the country’s wealth despite making up only 9% of the population.
The pandemic offers a rare opportunity to reflect on the country we have inherited, and the country we are building. To recognise in earnest that the pre-pandemic SA only worked for a few, we have to agree (or at the very least accept) that we will need to share more of the wealth and privileges — through private acts of generosity and through public forms of redistribution.
That is what the situation requires. As Servaas van der Berg and his co-authors explain in their Nids-Cram paper: “Social grant top-ups must continue beyond October. The severity of the economic shock and the depth of poverty make this imperative, despite fiscal constraints. Though top-ups are inadequate to compensate for other income and job losses in many households, the most common social grants, the old-age pension and the child-support grant (CSG), inject much-needed financial resources into many poor households.”
They also argue that the CSG top-ups must be paid per child, not per caregiver, and they must be increased if they are to prevent further child hunger.
Wills and her co-authors come to a similar conclusion: “To stave off mass, chronic hunger we simply cannot let up on the support being provided to households … failure to do so will deepen an emerging humanitarian crisis, hamper economic recovery and threaten sociopolitical stability.”
All of this will cost money that the state does not have.
Either we must find new social compacts and mechanisms to share wealth, income and opportunity, or we will continue towards a dystopian future, with islands of excess sitting precariously on a sea of poverty.
It is obvious that the willingness of the rich to part with some of their wealth — especially when compelled to do so by the government — is far greater when there is trust that the money will be used wisely by competent and ethical bureaucrats, to achieve goals we can all believe in. This means the government has to show its own moral integrity before it can call on rich South Africans to do likewise.
The appointment of competent and ethical technocrats to lead key initiatives and deliver results is essential — as is putting in place consequences for nonperforming bureaucrats and corrupt politicians. Realistic targets with reasonable time frames must be met with success or resignations. Build 400,000 new houses and apartments within the next two years; eradicate pit-latrines within two years.
Why can these things not be done?
WHAT IT MEANS:
The government has to show its own moral integrity before it can call on rich South Africans to do likewise
Perhaps most importantly, a competent development state is also necessary for long-term economic growth; the economy has to start growing and employing large numbers of people.
While there has been some tinkering around the edges of the political and economic possibilities available, nothing has so far made inroads into the gross income inequality that characterises SA society. Now, with a pandemic on our doorstep, a ravaged labour market and a hunger crisis not far behind it, where are we to turn?
“Business as usual” will not cut it. Like those resilient parents who manage to shield their children from hunger, the path forwards will require altruism and sacrifice.
There is no longer room for the fat of corruption, or the waste of ineptitude. But, similarly, there is no room for those who cannot see the basic dignity inherent in all people — a dignity that is being eroded. I have little doubt that this pandemic will be the straw that breaks the camel’s back in SA. I also have no doubt that the country has the skills and moral conscience to forge a new, better path. But that will require decisiveness, clarity of vision and, above all, leadership.
President Cyril Ramaphosa knows this. It’s time to be bold.
*Spaull is the principal investigator of the Nids-Cram study. The views expressed here and those of the author, are not necessarily those of the other Nids-Cram researchers. All papers are available at cramsurvey.org