Effectiveness of SP in Fighting
Poverty and Inequality
Prof Alex van den Heever
Chair in the Field of Social Security
Alex.vandenheever@wits.ac.za
SOCIAL SECURITY IS THE ROUTE TO
A HEALTHY SOCIETY
Market-related
work/employm
ent
Observed GDP
Unremunerated
work
Leisure
Unobserved
GDP
Total Welfare
Subsistence
work
Market-related
work/employm
ent
Observed GDP
Unremunerated
work
Leisure
Unobserved
GDP
Total Welfare
Subsistence
work
Subsistence
work
Unremunerated
work
Leisure
Observed GDP
Unobserved
GDP
Total Welfare
Market-related
work/employm
ent
Observed GDP
Unremunerated
work
Leisure
Unobserved
GDP
Total Welfare
Market-related
work/employm
ent
Cumulative share of income
Lorenz curve
Structural increase
in social risks
Structural decrease
in social risks
Cumulative share of population
Impacts on
•
•
•
•
•
Structure of consumption
Industrial development
Distribution of human capabilities
Distribution of welfare/wellbeing
Political stability
Under normal circumstances the quality of overall
social wellbeing is a policy choice and not a function of
factors outside the control of governments
Social protection seeks to maximise
welfare…
• No trade-off between well-designed social protection
and employment/GDP growth
– SP protects the distribution of income
– SP protect the distribution of capabilities
• Inequality will increase structurally in the absence of
social protection
• Economic development will proceed more normally if
overall welfare is seen as integral to the growth
process
The distribution of income does not reflect the
distribution of capabilities/contribution to output
Social Protection Floor
• Universal system
– Non-contributory (transfers and in-kind services)
• Requires income transfers
• Subject to progressive realisation
– Contributory (social insurance)
• Requires well governed mechanisms
• Focus on risk pooling
• Limited income transfer required
• Protection applies to families with and without
adequate incomes
South Africa comparison: percentage of
total income earned by the top 10% of
income earners
60
50
Percentage
40
30
20
0
1913
1915
1917
1919
1921
1923
1925
1927
1929
1931
1933
1935
1937
1939
1941
1943
1945
1947
1949
1951
1953
1955
1957
1959
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
10
SA
Source:
Malaysia
Korea
US
Year
Sweden
Germany
UK
Australia
World top incomes database: http://topincomes.g-mond.parisschoolofeconomics.eu/
South Africa comparison: percentage of
total income earned by the top 5% of
income earners
50
45
40
Percentage
35
30
25
20
15
10
0
1913
1915
1917
1919
1921
1923
1925
1927
1929
1931
1933
1935
1937
1939
1941
1943
1945
1947
1949
1951
1953
1955
1957
1959
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
5
Year
SA
Source:
Malaysia
Korea
US
Sweden
Germany
UK
Australia
World top incomes database: http://topincomes.g-mond.parisschoolofeconomics.eu/
(adjusted)
South Africa comparison: percentage of
total income earned by the top 1% of
income earners
30.0
25.0
Percentage
20.0
15.0
10.0
0.0
1913
1915
1917
1919
1921
1923
1925
1927
1929
1931
1933
1935
1937
1939
1941
1943
1945
1947
1949
1951
1953
1955
1957
1959
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
5.0
Year
SA
Source:
Malaysia
Korea
US
Sweden
Germany
UK
Australia
World top incomes database: http://topincomes.g-mond.parisschoolofeconomics.eu/
(adjusted)
Loss of
employment
Disability
Healthcare
Pensions
Basic family
incomes
Noncontributory
Pensions
Social
security
Contributory
Disability
Healthcare
Loss of
employment
Welfare
services
Early
childhood
development
Capabilities
Education
Policy
framework
Labour
market
Active labour
market policy
Conditions of
service
determination
policy
Training and skills
development
Industrial
policy
Tax regime
Economy
Economic
growth
Regulatory
governance
Special
employment
programmes
END