The Invisibles: South Africa’s growing underclass

10 September 2020

Poor people with little education and no work, and who generally live under difficult conditions, find themselves relying on state support, while being unable to occupy centre stage in public discourse. They are the underclass — often neglected and ‘invisible’ — yet increasingly, they are becoming a potential source of unrest.

Idle and out of pocket

The number of people who would like to work but do not have a job has risen from almost 6.5 million in 2008 to nearly 10.8 million in 2020. Just under 40% of the unemployed are young people aged between 25 and 34. Notably, millions among the youth who do not work are also not occupied with anything else. Around 8 million or some 40% of people aged between 15 and 34 are classified as NEETs — not in employment, education or training.

Following the imposition of a lockdown in response to the coronavirus pandemic in South Africa on 27 March 2020, social grants were topped up for the period May to October, while a new Social Relief of Distress Grant was introduced to assist people in dire need. In June alone, the total value of the different types of social grants amounted to R20.2 billion. This is not sustainable in the long term. Furthermore, the various grants are of relatively low monthly value — ranging between R350 and R1 800.

Little education and scarce jobs

Even as access to education has increased markedly—the number of people aged 20 and above with no schooling almost halved between 2002 and 2018, from a little over 3 million to just above 1.5 million—the output at school level gives cause for concern. A key indicator of poor performance —pupil culling— stands out in the FET Band (grades 10 to 12), suggesting that the lower grades do not adequately prepare pupils for completion. For instance, about 1 million grade 10 pupils were enrolled in 2017, but fewer than half sat for their matric exams in 2019. Less than a fifth did well enough to be able to study for a bachelor’s degree at university, while a mere 4% obtained a 50%+ mark in mathematics. Considering the fact that a higher-level qualification improves prospects for employment — the labour absorption rate (the proportion of people who are employed) for those with no schooling is only 31%, compared to 74% for people with a tertiary education — inadequate and poor-quality education sees millions facing bleak future prospects.

Living in limbo

Despite significant service delivery improvements over the years, multitudes of South Africa’s people continue to face numerous difficulties. Almost 2.2 million households still live in informal dwellings, over 2.6 million are without electricity and 1.8 million have no access to piped water. A ‘crisis of rising expectations’ can be seen, in which those who have not benefited from initial service delivery successes are frustrated, leading to political unrest and violence. Combined with an economic downturn, the impact is significant.

The Institute for Security Studies recorded more than 500 protests countrywide for the period April to July 2020, and these were mainly triggered by the policing of lockdown restrictions, labour issues, and problems relating to electricity supply. More mass action is likely in the near future.

Children too must contend with a fair share of challenges. Only a third of them live in the same household as both of their biological parents and almost a fifth live with neither parent — in child-headed households, in care homes, with foster parents or with relatives. They are particularly vulnerable to society’s numerous social ills.

Where to from here?

The underclass accounts for a sizeable share of South Africa’s population and it would be folly to ignore this category, which is made up mostly of young people. In the context of an economy that is barely growing, the provision of welfare is becoming increasingly unsustainable and has not succeeded in lifting people out of the underclass. There is widespread recognition that structural reforms must urgently be implemented to bring the country back to a positive trajectory:

- Raising economic growth and expanding fixed investment
Economic growth is critical as it increases income levels, expands domestic markets, boosts government revenues, and generates new jobs. South Africa needs large sums of both foreign direct investment and domestic investment. This can only be achieved in an environment where the property rights of private investors are guaranteed. This would primarily mean abandoning any notion of expropriation without compensation.

- Translating increased growth into increased employment
Achieving higher levels of employment requires wide-ranging deregulation in the labour market, thus removing barriers to entry for young and low-skilled individuals. A rise in low-wage employment would result in people dependent on social grants having an additional source of income. And those with higher paying jobs would have fewer dependents to support.

- Building and maintaining essential infrastructure
If the growth rate were to increase to about 7%, South Africa’s economy would double in size within ten years and the average GDP per capita would soar. To reach this level of economic growth, available infrastructure will have to be greatly expanded and existing infrastructure better managed and maintained.

This is especially true for electricity and transport infrastructure. Privatisation will help to bring in some of the revenue needed to fund new infrastructure, but this is unlikely to be enough. Therefore, successful public-private partnerships can be implemented to deliver/manage new and existing infrastructure.

- Helping the disadvantaged climb the economic ladder
Emphasis must be placed on the inputs needed to empower the poor, rather than on meeting racial targets. A policy such as Economic Empowerment for the Disadvantaged (EED) recognises and rewards business for expanding opportunities through direct investment, job creation, contributing to tax revenues and export earnings, topping up venture capital funds, appointing staff on a ‘wide’ definition of merit (which takes account of disadvantage), and entering effective public-private partnerships to improve education, healthcare and housing and to maintain and expand economic infrastructure.

In a world of precarity and poverty, only policies promoting growth, improved education and economic opportunities can lift many out of the underclass.

Thuthukani Ndebele is the head of research at the Centre For Risk Analysis (CRA), a think tank focused on political and economic risk in South Africa and the world. Bheki Mahlobo is an analyst in the CRA team. This op-ed was adapted from the CRA’s latest report, which available exclusively to CRA subscribers. To access this report, sign up for a free 30-day trial to the CRA: www.cra-sa.com/free-trial