Social Income in South Africa, An Economy Marred by High Unemployment, Poverty and Extreme Inequality

by METH, C, 2008
Research Report. Centre for Poverty Employment and Growth, Human Sciences Research Council

Disagreements about the severity of poverty and inequality in South Africa have stimulated debate on the social wage. Given extreme measurement difficulties, not much reliance can be placed on existing attempts to value the social wage. This paper proposes that income poverty measures be augmented to consider the impact of social spending on disposable income. Meth starts with one of the few published estimates of the value and distribution of the social wage, undertaken by the Human Sciences Research Council in 2004, and assesses this estimate based on studies in the United Kingdom. He then reviews the role of the social wage in social protection, which provides a context within which Standing’s concept of social income can be explored in some detail. A test for conformity with the standard economic definitions of income is conducted, after which the question of whether existing household surveys can be used to measure social income is posed. The paper offers an approach that, although it cannot cope with big-ticket social wage expenditures (health, education and housing), could at least render income poverty estimates less vulnerable to the charge of neglecting all effects of social spending on welfare. Tackling the job of producing the necessary information will be an ambitious undertaking, whose satisfactory execution will require more than the preliminary examination provided here. The paper should thus be viewed as a first stab at a difficult problem.