Perspective

National Rural Employment Guarantee Act

India’s National Rural Employment Guarantee Act, which guarantees 100 days of work a year to at least one unemployed rural person in a household where no one has a job, should be deployed in the South African context, Robert McCrutcheon, a professor of civil and environmental engineering at the University of the Witwatersrand, said at the International Labour Conference in Durban.

“Legislating employment gets rid of all the objections to temporary employment and its small–scale impact,” he said.

“Only R3–billion a year, which is equivalent to 0.27% of the country’s R1 500–billion–a–year gross domestic income, is spent on the Expanded Public Works Programme (EPWP), so it’s not surprising that it’s hardly perceptible at national level.”

Dave Jennings, a director of consulting company itt, which focuses on reducing poverty by enabling access, said one had to look at the size and scale of the problem. “It’s important to know how many unemployed people we are looking at and what we are going to do for them rather than creating jobs which don’t address the size of the problem,” he said.

Shisaka Development Management Services recently undertook a rough study for the EPWP which indicated that there are 4.5 million unemployed people seeking work in South Africa. Since 2003, the EPWP has provided 661 000 jobs and aims to create one–million jobs by 2009.

Jennings said that adopting the Indian model of legislating employment would cost between R10–billion and R30–billion a year in wages and that, over and above this, there would still be the additional costs involved in administration, materials and supervision.

Dr Santosh Mehrotra, a senior consultant to the Indian government’s planning commission, said the reason why it was important for South Africa to go the Indian route was that it already had very wide–ranging social assistance programmes, including child support, old–age pensions and disability pensions.

“You already have almost an industrialized country’s social assistance program but you still have a 25% unemployment rate and, in a country so racially divided, you have no choice but to expand the program,” he said. He pointed out that South Africa had the fiscal capacity to do this as it had a budget surplus of 2% of its gross domestic product (GDP). “Government would be spending no more than 0.2% on this programme,” he said. “India, on the other hand, has a budget deficit of 3% to 4% of GDP, yet we can still afford to have it.”

The Act was passed at the beginning of 2006, following decades of job programmes that had not sufficiently addressed the unemployment problem.

“Many of the beneficiaries were not from the neediest groups and there was little community inclusion,” he said. “The projects also provided only between 16 and 29 days of employment a year and there were reports of corruption and that payments were often less than the prescribed wages.” By the beginning of 2006, legislated employment had become a political and economic imperative because the new government, which was elected in May 2004, had been elected on a ticket of rural and agricultural development. Mehrotra said the big difference between the Employment Act and job programmes was that job programmes were driven by supply, while the Act was driven by demand. “The Act guarantees work for any qualifying unemployed person who applies for it within 15 days, or guarantees the payment of unemployment benefits, so shelf projects must be ready,” he said.

Wages are prescribed under the Minimum Wages Act. This financial year, India was likely to spend 0.3% of GDP on employment, but the government didn’t expect the cost to rise to over 0.6%, he said.

Jennings said the EPWP had a proposal on the table for the introduction of a model based on the Indian experience and that it was under discussion by government. However, Mbongeni Monolane, the Department of Public Works, said the introduction of legislated employment was unlikely at this stage.

Source: Margie Inggs. Indian job–guarantee model could have relevance for South Africa. Report of International Labor Conference, Durban, October 2007. Published 19 October 2007 in http://www.engineeringnews.co.za/article.php?a_id=118729