Articles by Pippa Green
This is part 3 of a three-part series on pension fund coverage. The first article provides estimates of the size of the pension coverage gap, the second deals with the fiscal costs of co-funding universal coverage, and this article suggests how this might be paid for.
A key objective of social security policy is to increase participation in contributory savings arrangements that provide funded incomes in retirement. This is the second of a three-part series on pension fund coverage. The first estimated the size of the pension coverage gap. In this article, the fiscal costs of co-funding universal coverage are examined. In the third part of the series, a tax reform that might pay for a pension plan subsidy is suggested.
Out of 16 million employed people under the age of 65, about seven million contribute to pension or provident funds. Most of those who are not covered earn below the tax threshold, including workers in the informal and agricultural sectors. This first of a three-part series quantifies the pension coverage gap. The second and third parts will examine the fiscal costs of co-funding universal coverage and how this might be paid for.
The COVID-19 grant is the first in South Africa to explicitly target the unemployed. By the end of 2020, the grant had brought some six million previously unreached people into a welfare net that had previously excluded them on the assumption they could find work. How have the grants impacted poverty and inequality? And what are the implications for long-term policy?
How to fund higher education in South Africa: a public-private-university partnership may be the answer
Higher education is both a private and public good – for society, an investment in the future, for the individual, a chance to improve their lives. But the current model of student funding is neither financially nor fiscally sustainable. It is unlikely that government can fund the “missing middle” – students from households with incomes between R350 000 and R600 000 a year. What then to do? A loan scheme involving universities, government, and the private sector may enable students to graduate and to start re-paying only once their income reaches a certain level.
This is the last in a four-part series by Michael Sachs, extracted from his paper, Fiscal Dimensions of South Africa’s Crisis (the full paper can be found on http://www.wits.ac.za/scis). In the last article, he examined the extent and nature of South Africa’s debt burden, distinguishing between the level of debt and its trajectory in relation to economic growth. He argued that SA’s debt was not only an impediment to economic growth, but that it also risked undermining the progressive nature of SA’s tax system.
This is the third in a series of articles by Michael Sachs, extracted from his paper, Fiscal Dimensions of South Africa’s Crisis. In the last article, he showed how the real value of public services has declined over the past decade, and how substantial off-budget allocations to state-owned enterprises have come at a cost to the poor. In this article, he examines the extent of South Africa’s fiscal crisis as the country struggles to recover from the impact of Covid-19. He argues that the recent budget proposes a path of consolidation that will erode core public services further. It will also be difficult to accelerate the pace of economic growth in the face of a large and sustained negative fiscal impulse. But even if the consolidation achieves its targets, it is unlikely to alleviate the debt burden. Rising interest payments mean that rent is drained from the proceeds of production, with implications for economic growth and the distribution of national income. Without an acceleration in nominal GDP, it is difficult to see how South Africa will avoid a period of fiscal and financial disorder.
In the first article in this series, we examined the history of SA’s economic policy and some of the roots of its current fiscal crisis. We looked at how economic growth in the country has consistently depended on the global economy and how a commodity-fuelled boom created a mirage of permanent economic growth in many developing countries, which were left without fiscal buffers once the uptick had stagnated or swung downward. In SA’s case, there were also self-inflicted blows, both economic and political, which began after 2007. But despite this, fiscal policy was expansive relying on the hope of increased growth, without sufficient planning for where it would come from. In Part 2 of this series Michael Sachs explains how austerity was implemented, almost by stealth, but without the necessary fiscal consolidation needed to avert a crisis.
At the start of the democratic project, South Africa hoped for a “fiscal renaissance”. After a brief period of consolidation, social spending rose, as did remuneration for public servants and expenditure on infrastructure. By the early 2000s, revenue was buoyant, the debt-to-GDP ratio was at historic lows, and the budget balance moved into surplus. But by the second decade of the millennium, growth faltered. And at the very moment that conditions demanded fiscal adjustment, government policy became increasingly incoherent.
A new longitudinal study of learners in public education in the Western Cape shows a marked decline in repetition rates over the past six years. The drop in repetition has also led to more learners making it through matric. The study could have significant lessons for policymakers in terms of the interventions required to reduce dropouts.