the developmental impact of social pensions in southern africa 4 october 2006, lisbon michael samson...
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The developmental impact of
social pensions in Southern Africa
4 October 2006, Lisbon
Michael [email protected]
Economic
Policy
Research
Institute
EU/ILO/Government of Portugal
World conference: Social Protection and Inclusion
HelpAge International and Save the Children UK side event
“Breaking the poverty cycle: Securing rights to cash benefits for older people
and children through national commitments and community action”
Five countries in Africa have non-contributory social pensions
MauritiusLesotho
Botswana
Namibia
South Africa
Universal or means-tested pensions to older people
Non-contributory
Protects against age-related poverty
Successes in Latin America, Asia and Africa
Growth lessons from Mauritius
Mauritius
A social pension since 1950
Universal take-up Costs 2% of GDP One of the fastest
growing African countries
Social pensions represent a social contract that lays a foundation for stability, growth and development
Lessons from Botswana
A social pension since 1996
Universal take-up Costs 0.4% of GDP Social transfers
reduce inequality in one of the world’s most unequal societies— helping to stabilise conditions that promote economic growth.
Botswana
Social transfers in South Africa support economic growth along multiple dimensions
Sub-Saharan Africa’s oldest social transfer programme
Costs 3% of GDP Substantial impact on
poverty reduction Extensive studies of
growth outcomes– Human capital– Labour markets– Macroeconomics
South Africa
South Africa’s social pension reduces poverty and destitution substantially
96%
54%
21%
98%
71%
32%
0% 20% 40% 60% 80% 100%
Householdsonly with
older people
Householdsincluding
older people
Allhouseholds
Poverty gap reduction Destitution gap reduction
Impact of the social pension on employment and labour force participation
corrected data
Household receives
social pension in 2004
Household does not receive social pension
in 2004
Improvement associated with social pension
Probability that a poor working age adult will: Find employment in 2005 9% 7% 2% Be actively looking for work in 2005 15% 13% 2% Not participate in the labour force in 2005 76% 80% 4%
NOTE: Sample includes working age adults (older than 16) in households in the lowest income quintile with older people but with no working individuals in September 2004.
SOURCE: Statistics South Africa Labour Force Surveys and EPRI calculations
Spending shares vary by income group—and social transfers redistribute income and restructure the composition of spending
Food
0%
10%
20%
30%
40%
50%
1 2 3 4 5 6 7 8 9 10
Income Decile
Ex
pe
nd
itu
re S
ha
re
Transport
0%
2%
4%
6%
8%
10%
12%
14%
1 2 3 4 5 6 7 8 9 10
Income Decile
Ex
pe
nd
itu
re S
ha
re
Source: Statistics South Africa Income and Expenditure Survey 2000
An illustration from South Africa
Labour market lessons from Namibia
A transformed pension system since democracy in 1990
Near-universal take-up (85%)
Costs 0.7% of GDP Supports local
economic activity and labour market participation, particularly for women
Namibia
Composition of rural households in Namibia which include older people receiving pensions
SOURCE: Devereux 2005
Male head
Female head/ spouse
Son
Daughter
Grandson
Granddaughter
Lessons from Lesotho
The world’s newest universal social pension, implemented in 2004
Formal evaluations still in progress
Costs 1.4% of GDP Supports children
increasing living with older people
Lesotho
Social protection and growth: the transmission mechanisms
Social Transfers
human capital
assets
risk
equity
employment
macro-economy
humanwell-being
economicgrowth
Fiscalsustainability