News agency, Cape Town, South Africa
Sunday July 23rd 2017

Poor face uphill struggle due to economic crisis

Yugendree Naidoo

With warnings that South Africa faces a debt trap due to its expanding social welfare system and concerns over manufacturing sector job losses, experts have warned of increased malnutrition and family break-ups amongst poor households due to the global economic crisis.

Other negative consequences for the poor could be an increase in school truancy and growing informalisation of jobs.

But despite these predictions, ahead of April 2009 elections political parties have done little to address the detail of how jobs would be created to address poverty, while government lacked an effective plan to tackle poverty, the experts say.

Isobel Frye, director of the Studies in Poverty and Inequality Institute, said should the situation of millions of people that already go hungry be exacerbated, it was likely there would be an increase in malnutrition, stunting and development problems.

She said the “dire circumstances” of poorer households would be worsened, with coping mechanisms such as sending a child away to relatives who could afford to provide care leading to the break-up of families and a loss of child control.

With tightened household budgets came the risk that there would be less money for school uniforms and travel to school, meaning that children would not go to school, in turn deepening the poverty trap as the only chance of finding a job was through a good education.

However, despite these concerns political parties were not doing enough to inform potential voters about their plans for tackling the problem, she said.

And plans by government to extend the social grant system would ultimately depend on whether enough revenue was available for implementation, she said.

This echoed warnings from experts quoted in Business Report on Monday, which said South Africa risked a debt trap due to its expanding social welfare system.
Centre for the Study of Democracy director Steven Friedman said the “potential difficulty” was that there would be fewer funds available to continue issuing state social grants to the poor.

He said without an effective response by government to the crisis it would be difficult to address increasing poverty.

Friedman said government “couldn’t do it by themselves” and needed to work with all economic roleplayers in addressing the situation.

He said a critical issue to look at were the effects on the informal economy. It was important to assess who was part of the informal economy and how to keep them there, he said.

StatsSA figures show a drop in unemployment in the last quarter of 2008, but trade union federation Cosatu has dismissed this and commissioned research on retrenchments amongst its affiliates.

National Labour and Economic Development Institute (Naledi) research director Kimani Ndungu said over the last 15 years there had been an increase in contract jobs replacing permanent jobs in various sectors of the economy.

When companies downsized contract workers were usually “the first to go” while permanent workers had their hours and benefits reduced.

Job losses in the formal economy meant there was less taxable revenue to finance public investments, more people looking for jobs and an increase in labour disputes as retrenched workers challenged their retrenchment, he said.
– West Cape News

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