2005-11-01,+Works+programmes+not+way+out+of+poverty,+BDay

Business Day, Johannesburg, 31 October 2005
=Works programmes are not the way out of permanent poverty=


 * Jonny Steinberg**

IN ITS 2004 election campaign, the African National Congress (ANC) touted that the Expanded Public Works Programme would bring large numbers of poor and unskilled people to the labour market: “a million employment opportunities to be created in the next five years” was its promise.

How are we doing on that front?

The programme was officially launched in April, and it is too early directly to measure its affect on poverty and unemployment. But earlier public works projects, upon which the current programme is modelled, have been studied, and it is possible to say with some confidence that the ANC was wrong. The vast majority of those who sign up for temporary employment in the programme will in all likelihood experience “income shock”. They will spend most of their wage on current consumption. Within a few months, they will be as poor as they were before the programme, and no closer to finding a job. These findings are extrapolated from an evaluation, written for the UK’s department for international development last December, of the Gundo Lasho road upgrading in Limpopo Province.

The irony is that, when measured against sober goals, the Gundo Lasho programme was an overwhelming success. It managed to substitute labour-intensive for capital-intensive construction at no extra cost and with no deterioration in the quality of work. It thus put money in the pockets of very poor people with admirable economy and efficiency. That has to be a good thing. The problem arises when the programme is touted as something it isn’t. For short-term public works employment to take the very poor out of poverty, a delicate balance must be struck. On one hand, the wage must be low enough for the very poor to select themselves. If the wage is too high, it attracts people already earning income, and draws them out of existing labour markets.

Yet if the wage is so low that recipients cannot invest it in schooling, household assets, and productive investment, it will not assist them to climb out of poverty. The Gundo Lasho experience suggests that demand for unskilled South Africa labour is so low that this fine balance simply cannot be struck. The wage was too high to attract only the unemployed. And yet it was still too low for significant numbers of people to invest it in their futures.

The mean monthly wage for work on the programme was a very modest R579 a month. Even at this low rate, it comfortably beat Limpopo’s mean monthly informal sector income of R385. It thus came as no surprise that 33% of people who subscribed to the programme gave up other work in order to do so. To attract only the economically inactive, the programme would probably have had to set its mean wage at less than R385 a month.

What did subscribers to the programme manage to do with their R579 a month? The department for international development study found that 87% of households with public works employment were living below the poverty line. And 96% of households that had members in public works employment the previous year were below the poverty line.

This suggests that, for the three months that people work on the roads, their poverty is alleviated a little. Once the work is done, they revert to their previous condition.

Indeed, the study found that 75% of recipient households did not manage to save money, acquire insurance, or buy assets like cooking implements and furniture. Four out of five households used the wage primarily to buy food, 13% primarily to buy clothes, and 4% to pay for education. Most concerning of all, perhaps, is that working on the Gundo Lashu programme appeared not to bring people much closer to accessing the open labour market; 19% of former Gundo Lashu employees were working at the time they were interviewed by department for international development researchers, compared to 17% of working age household members who didn’t work on the Gundo Lashu programme. The notion of “one million job opportunities” rings a little hollow.

So why did the ANC pitch the expanded public works programme as a job creator? The optimistic answer is that the programme became the victim of overexuberant election-time spin; that it in fact bears no relation to the serious thinking the ruling party has done about job creation.

The pessimistic answer is that it does; that we are truly at a loss when it comes to thinking about employing the unskilled; that we have come to believe in hocus-pocus.


 * Steinberg is a freelance writer.


 * From: http://www.businessday.co.za/articles/opinion.aspx?ID=BD4A107439**