South African Welfare State

Inés Debén Bravo
Sarah El’Abdli
Carla Rimbau Milla

Institut Barcelona d’Estudis Internacionals (IBEI)
2011/2012

Comparative Politics and Democratization – seminar 5
Welfare States

The case of South Africa’s welfare system

Taking as a case study the South African Welfare regime, and mainly focusing on social assistance, this essay aims at critically analysing Esping-Andersen'swelfare state model.

According to Esping-Andersen’s criteria, South Africa has a ‘liberal’ welfare state. Esping-Andersen states that a ‘liberal’ welfare state has “means-tested assistance and modest social insurance”. In South Africa, anyone applying for a social grant must qualify through a means test by the SASSA (South African Social Security Agency), which evaluates their income and assets;the threshold of a single individual is R44 880, R89 760 if married. The asset threshold is R752 400 if you are single, R1 504 800 if married. If the income and/or assets are higher than the thresholds one will not qualify for a social grant. Social assistance is modest, for example, the Child Support Grant is R270 per month. Social Insurance is also modest; employees contribute 1% of their salariesto the UIF and employers contribute a further 1% of salaries; the benefit is for a maximum of 6 months and has strict rules of entitlement and low remuneration of only 45% of previous earnings, see Table 1 and 2. Thus a person cannot rely on social insurance and benefits and must continue to seek employment.

Esping-Andersen states that social stratification is high in a ‘liberal’ welfareregime; benefits mainly cater to clientele of low-income, working class, state dependents. For South Africa, the income threshold to qualify for social assistance for a single person is R44 880 per year. In addition, private insurers serve mainly the white, higher income groups, leaving the public sector to serve the lower income, largely black African population. See Table 3. Once more, more than 80%of South Africans cannot afford private medical insurance and rely on publicly funded hospitals, which charge a small fee for treatment, whilst the richer segments of society opt for welfare from the market, such as the Swiss Relief. This increases social stratification.
With regard to the relationship between the state, family and market; a ‘liberal’ welfare state has “minimal publicintervention under the assumption that the majority of citizens can obtain adequate welfare from the market. The role of government is, in part, to nurture rather than replace, market transactions”. The South African state passively encourages the market to act as a co-provider of benefits by providing a low level of public services. In addition, although the state contributes 40% of all expenditure onhealth, resources are concentrated in the private health sector, which sees to the health needs of 20% of the population. This leaves the public health sector under-resourced, overused and under pressure to deliver services to about 80% of the population. While the private sector, caters to middle- and high-income earners who tend to be members of medical schemes. This minimizes de-commodification andencourages a strong market-oriented welfare system for middle and upper-income groups. This confirms Esping-Andersen’s assertion that in a ‘liberal’ welfare state, the limits of welfare equal the marginal propensity to opt for welfare instead of work which creates a state-market dualism whereby the state defers to the market.

After apartheid, democratic South Africa inherited an unequalsocial security system, for which mainly whites were eligible. South Africa’s extensive inequality – one of the highest in the world – and poverty made it necessary to address social security structure. The country’s current system of targeted social grants was implemented and reformed in two main phases: (a) the 1994-1999 phase and (b) the phase since 2000, which witnessed the expansion and major...