SCHOOL OF DEVELOPMENT STUDIES RESEARCH REPORT No. 86 ‘ACTIVE’ LABOUR MARKET POLICIES: LESSONS FOR SOUTH AFRICA? Charles Meth November 2010 SDS RESEARCH REPORT 86 ‘Active’ Labour Market Policies: Lessons for South Africa? Charles Meth1 First published by the School of Development Studies in 2010 ISBN: 978-1-86840-698-2 Available from the website: www.sds.ukzn.ac.za/ Or The Librarian School of Development Studies University of KwaZulu-Natal Howard College Campus Durban 4041 SOUTH AFRICA Tel: +27 31 260-1031 The School of Development Studies is one of the world's leading centres for the study of the political economy of development. Its research and graduate teaching programmes in economic development, social policy and population studies, as well as the projects, public seminars and activism around issues of civil society and social justice, organised through its affiliated Centre for Civil Society place it among the most well- respected and innovative inter-disciplinary schools of its type in the world We specialise in the following research areas: civil society; demographic research; globalisation, industry and urban development; macroeconomics, trade and finance; poverty and inequality; reproductive health; social aspects of HIV/AIDS; social policy; work and informal economy. School of Development Studies Research Reports are the responsibility of the individual authors and have not been through an internal peer-review process. The views expressed are those of the author(s) and are not necessarily shared by the School or the University. 1 Charles Meth is an Honorary Research Fellow in the School of Development Studies University of KwaZulu-Natal, Durban, and in the Department of Sociological Studies in the University of Sheffield. He is a Research Affiliate in the Southern African Labour and Development Research Unit in the University of Cape Town. 2 SDS RESEARCH REPORT 86 Abstract Commencing with an overview of current definitions of active labour market policies (ALMPS), policies aimed at ‘activating’ the unemployed, and some of the economically inactive currently receiving welfare benefits, this paper glances at the history of the transition from so-called passive to active benefit regimes, then looks at which of the many ALMPs ‘work’, and in what settings. The processes by which subjects for activation are selected are examined, and brief reference is made to the techniques for evaluating ALMPs. Attention is drawn to the coercion behind the discourse of rights and responsibilities that animates the ‘workfare’ and ‘welfare-to-work’ policies of the USA and UK, respectively. The progress of the UK’s ‘welfare-to-work’ programme, especially that for young people, is examined. Possible consequences for the programme of the crisis currently devastating the world economy are considered. Attention then turns to South Africa’s largest active labour market intervention, the Expanded Public Works Programme (EPWP). Its first five-year phase having been completed, a second phase, more ambitious by far than its predecessor, has recently commenced. Critical analysis suggests that contrary to the hype, the programme has thus far made little lasting impact on the poverty and unemployment it is supposed to address. Once past the EPWP, the equally large problem of what to do about the millions of young people in South Africa who are not in education, employment or training, is considered. The poor education that most of them will have had, places them in the category considered most difficult to ‘activate’. Lack of demand for simple undifferentiated (unskilled) labour, coupled with institutional weakness, is argued to make the ambition of launching anything more than some small proportion of young people into income-generating economic activity, using active labour market policies, a pipedream. The recently-formed National Youth Development Agency (NYDA), the body that is supposed to play the major role in ensuring “seamless integration, sustainability and responsiveness to the demands and aspirations of South Africa’s youth” will probably set back the development of youth, at least in its first years of operation. A little attention is then devoted to the question of the limits to ‘activation’ in South Africa, the chief of these being the lack of ‘suitable’ jobs into which people may be placed, and the weakness of the institutions that should be responsible for placing them, were such jobs to exist. 3 SDS RESEARCH REPORT 86 Acknowledgements This work began life as a paper, commissioned by the Studies in Poverty and Inequality Institute (SPII). The first draft, under the title “Active Labour Market Policies: ‘Activation’ in South Africa, with passing reference to youth unemployment” was presented at the ‘Civil society conference towards a roadmap on social security’ in Johannesburg, 19th – 20th March 2009, convened by SPII. Since then, it has undergone extensive rewriting, much more than doubling in length. Although it is published with SPII’s permission, the views expressed in it are mine. Many thanks to Isobel Frye, the director of SPII, for giving me the opportunity and encouragement (intellectual and financial) to make a foray into a field of considerable interest and importance. Two large sections were added to the paper (it has now become a monograph!) after the first draft (Version 1) was presented at the SPII conference referred to above. The first of them, on the ideological climate within which reforms to the UK’s welfare system are being made, was prompted by the responses to an article in the Guardian on welfare reform. The loathing of benefit ‘scroungers’ expressed by so many raised the obvious question: how well-informed are these angry people? From a modest beginning of a few pages of commentary on the pervasiveness of negative stereotypes about recipients of unemployment benefits, the discussion began to assume the dimensions of a paper in its own right, one whose focus was moving away from a concentration on ALMPs per se. It made sense, therefore, to remove it from that constraint, and to allow it a separate existence (Meth, 2010). The second addition to the paper, on the Expanded Public Works Programme (EPWP) in South Africa, was inspired and informed by the work done by Anna McCord. Her extensive knowledge and insights have helped to improve my understanding of the subject, and, I hope, to sharpen the critique offered of this, South Africa’s largest job-creating initiative. Needless to say, the errors in the paper are all my very own. 4 SDS RESEARCH REPORT 86 Abbreviations and acronyms International AFDC Aid to Families with Dependent Children (USA) ALMP Active labour market policy CTC Child Tax Credit (UK) DSCF Department for Schools, Children and Families DWP Department for Work and Pensions (UK) EGS Employment guarantee scheme ESA Employment and Support Allowance (UK) FTE Full-time equivalent GDP Gross domestic product HMRC Her Majesty’s Revenue and Customs IB Incapacity benefit (UK) ILO International Labour Organization IMF International Monetary Fund IS Income support (UK) JCP Jobcentre Plus (UK) JSA Jobseeker’s Allowance LFS Labour Force Survey (UK and South Africa) M&E Monitoring and evaluation NDYP New Deal for Young People (UK) NEET Not in Employment, Education or Training NGO Non-governmental organisation OECD Organisation for Economic Co-operation and Development ONS Office for National Statistics (UK) PA Personal Advisers (UK) PES Public employment service PIRL Progress in International Literacy Reading study PRWORA Personal Responsibility and Work Opportunity Act (USA) SES Socio-economic status SNA System of National Accounts TANF Temporary Assistance for Needy Families (USA) TIMSS Trends in International Mathematics and Science Study TUC Trades Union Congress (UK) UK United Kingdom UNESCO United Nations Education, Scientific and Cultural Organization USA United States of America WFI Work Focused Interview (UK) WTC Working Tax Credit (UK) 5 SDS RESEARCH REPORT 86 South Africa ANC African National Congress AsgiSA Accelerated and Shared Growth Initiative for South Africa BIG Basic Income Grant CBO Community-based Organisation CEC Central Executive Committee (of Cosatu) CHW Community Health Workers Cosatu Congress of South African Trade Unions CWP Community Work Programme DoL Department of Labour DoSD Department of Social Development DPW Department of Public Works ECD Early Childhood Development EPWP Expanded Public Works Programme GHS General Household Survey HCBC Home and Community-Based Care HSRC Human Sciences Research Council IDT Independent Development Trust Jipsa Joint Initiative for Priority Skills Acquisition MEC Member of Executive Council [provincial] MIG Municipal Infrastructure Grant MTEF Medium-Term Expenditure Framework NCOP National Council of Provinces Nedlac National Economic Development and Labour Council NPO Non-Profit Organisations NYDA National Youth Development Agency (NYDA) NYC National Youth Commission NYS National Youth Service OHS October Household Survey PCAS Policy Co-ordination and Advisory Services PIG Provincial Infrastructure Grant (also referred to as IPG) PSLSD Project for Statistics on Living Standards and Development QLFS Quarterly Labour Force Survey SALDRU Southern African Labour and Development Research Unit SETA Sector Education and Training Authority SMME Small-, Medium- and Micro-Enterprises SPII Studies in Poverty and Inequality Institute TIPS Trade & Industry Policy Strategies UIF Unemployment Insurance Fund UYF Umsobomvu Youth Fund 6 SDS RESEARCH REPORT 86 Contents