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Inequality and structural poverty linked in South Africa

3 September 2010

National conference on Inequality and Structural Poverty in South Africa to be held this month

the basic set-up of society systematically denies opportunities for large numbers of marginalised people in South Africa

Chronic poverty is a symptom of structural poverty and inequality. Structural poverty is rooted in the basic set-up of society — in the distribution of assets, continuing unequal social relations and in processes of exclusion and marginalisation.

Simply expecting the poor to ‘try harder’ by turning into entrepreneurs and saving their way out of poverty, will not address such structural factors.

Overcoming Inequality and Structural Poverty in South Africa: Towards inclusive growth and development

Rather, we need to look at how the basic set-up of society systematically denies opportunities for large numbers of marginalised people in South Africa.

Durable inequality is a reality in South Africa, and structural poverty cannot be understood or tackled separately from inequality.

Causes of the problem

Persistent chronic and structural poverty in South Africa do not a result from a lack of growth; instead they result from the kind of growth we have experienced — growth which is not employment intensive. While some blame labour laws for this jobless growth, others argue that a wide range of policies favour vested economic interests, capital intensive manufacturing and big business, but fail to create an even playing field that would allow marginalised people to benefit from growth. Therefore it is necessary to consider in-depth, what kind of policy choices would make for a more inclusive growth path.

There are no easy answers. However, the link between inequality and poverty must be addressed more effectively and debate on how to achieve inclusive growth must take place. We need to avoid grandstanding and political gestures, and create space for serious discussion about the kind of policy choices that would make inclusive growth necessary. In contemplating a better future, we need to ask: What are practical requirements for an employment-intensive growth path? What policy choices need to be embraced, and what actions can immediately be undertaken? These questions must not only be asked and explored, but we must make solid headway in finding the answers.

The policy debate around inequality

South Africa is one of the most unequal societies on the planet, and it is deeply worrying that inequality has worsened in the last decade. Therefore, we must tackle the notion that poverty in South Africa can be addressed separately from inequality.  While some economists argue that inequality is not such a big problem as long as there is some absolute improvement in poor incomes, other schools of thought hold that inequality is dangerous in itself. The structural distortions created by extreme inequality can constrain growth.  Furthermore inequality can cause instability, and can dangerously erode the social fabric, especially in countries like South Africa with a history of divisive social struggle. Therefore, we must link poverty reduction more effectively to discussions of social inequality and how to reduce it.

Such fundamentals cannot be left to ‘political solutions’ but require realistic policy proposals grounded in an understanding of reality.

The national conference, Overcoming structural poverty and inequality in South Africa:  Towards inclusive growth and development, from 20–22 September 2010 seeks to explore these themes. We trust that the conference will help us develop a workable vision to move us forward towards accepting the challenge of our transformation.

Prior to the conference, we are getting the discussion going, so please participate in the discussions by commenting below.

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3 Comments leave one →
  1. Rebecca M.E. Pointer permalink
    15 September 2010 11:03 am

    Ian Goldman of PSPPD contributed an IMF-ILO discussion document to this discussion.

    The document says that the world faces major challenges in creating enough quality jobs to sustain growth and development. The financial crisis of 2007–09 led to a sharp increase in layoffs and a slowdown in hiring, and thus to rising unemployment, underemployment and informal work. In emerging and developing countries, the economic shock hit jobs in export sectors hard, but these are now recovering, in part as exporters have diversified their markets to rely less on those of the advanced economies. But the slowdown also hit the large informal economies of the developing world. Informal employment has increased, and the numbers of working women and men who cannot earn enough to keep themselves and their families out of poverty have risen.

    The scars of this distress in labour markets could last for a very long time – in the case of young workers unable to get their first job, a lifetime. Political, community, business and labour leaders all over the world are asking for answers to the threat of a slow jobless recovery. And they want to know that recovery can transition into strong, sustainable and balanced growth.

    This challenge brought the IMF and the ILO together to stimulate an active discussion of how international cooperation and policy innovation can address the urgent need to improve the capacity of economies to generate enough good jobs – decent work – to meet societies’ needs.

    You can read more of this discussion at: http://tinyurl.com/2fo5ry4

  2. Rebecca M.E. Pointer permalink
    13 September 2010 3:37 pm

    This contribution to the discussion was made by UNRISD:

    Current poverty reduction approaches that separate poverty from the broader process of economic growth and development are unlikely to succeed and could leave about 1 billion people destitute by 2015, according to a new United Nations report at http://tinyurl.com/3ydkam9

    The report by the UN Research Institute for Social Development explores the causes, dynamics and persistence of poverty, as well as what works and what does not in international policy and practice.

    The study, released as governments and international institutions focus on cutting poverty in half to meet the target in the Millennium Development Goals by 2015, reveals the multiple and complex processes involved in sustainable poverty reduction and lays out a range of policies and institutional measures that countries can adopt to succeed.

    The eight MDGs provide concrete benchmarks for tackling extreme poverty. They include goals and targets on income poverty, hunger, maternal and child mortality, disease, inadequate shelter, gender inequality and environmental degradation.

    The UNRISD report argues that while simple prescriptions may attract government support and funding from donors, they are unlikely to create conditions in which poor people can lift themselves out of poverty.

    According to the report, evidence has shown that poverty is reduced when economic and social policies, institutions and political arrangements are mutually supportive. The pursuit of policies in one social development domain while neglecting others is likely to undermine efforts to combat poverty and inequality.

    Yusuf Bangura, UNRISD Research Coordinator and lead author of the report, attributed failure to the tendency to neglect the root causes of poverty.

    “Current approaches to poverty tend to focus on things poor people lack rather than why they lack them. But when a large proportion of a country’s population is poor, it doesn’t make sense to detach poverty from the dynamics of economic growth and development,” Mr. Bangura said.

    “For example, in many countries income and wealth inequality have increased and inequalities based on gender and ethnicity persist. High levels of inequality are often found in the poorest countries, which means that poverty and inequality must be considered as part of the same problem.

    “But apart from a commitment to eliminate gender disparities in primary and secondary education, current approaches to poverty reduction virtually ignore inequality. They shy away from confronting inequality head on – through redistributive policies, for example,” he added.

    The report draws lessons from countries that have successfully and sustainably improved the well-being of the majority of their populations. In those cases, economic, social and political transformations – not poverty reduction per se – were central public policy objectives.

    According to the report, the following elements are crucial to sustainable and inclusive development:
    – Economic transformation, involving not only growth but also changes in the structure of the agricultural, industrial and service sectors that generate and sustain jobs that are adequately remunerated and accessible to all, regardless of income or class status, gender, ethnicity or location.
    – Social transformation, accomplished through comprehensive social protection and services that are grounded in universal rights and supportive of social cohesion and democratic politics.
    – Political transformation, including the protection of civic rights, activism and political arrangements that ensure states are responsive to citizens’ needs and that the poor have influence in how policies are made.

    The report argues that reducing poverty takes more than having employment-centred growth strategies, or pursuing universal social policies, or getting the politics correct. To deliver maximum impact all three must work together, the report stresses.

    In calls upon governments and international institutions to recognize how institutions and policies are linked across economic, social and political spheres, and act on the knowledge when designing and implementing poverty reduction strategies.

    The report is the result of global research involving 130 scholars and drawing on in-depth case studies, country overviews, thematic background papers, UNRISD work on social policy, as wells as gender, governance and corporate social responsibility.

  3. Rebecca M.E. Pointer permalink
    8 September 2010 2:57 pm

    From Kate Philip:

    The OECD held a one-day workshop in Paris to present the findings of a series of papers commissioned on this topic from Brazil, India, China and South Africa. For South Africans attending the OECD conference, watching the comparative slides on global trends flashing up on the screen is a bit like attending a performance review that you know you have failed.

    ‘Inequality got worse since the end of apartheid? What happened?’ asked an incredulous panelist. The South Africans present looked contrite.

    By contrast, Brazil has reversed its trend of rising inequality for the first time since they started to track inequality in 1960. ‘People had come to think of rising inequality as a natural state of affairs, as how things are,’ explained Brazilian panelist Marcelo Cortes Nero; ‘Now it is clear policy action can make a difference.’

    To read more of this article click on the link: http://www.plaas.org.za/newsevents/povcon2010/microsoft-word-inequalities-in-emerging-economies-op-ed-kp-for-blog.pdf

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