How four months wiped out 10 years of jobs growth – and matched a decade of growth in SA’s social security net

Vladimir Lenin is famously quoted as saying that “There are decades where nothing happens and weeks where decades happen.”

Looking back on the last few months it is clear now that a decade’s worth of change has happened in the space of just four months. In an ironically symmetrical fashion we seem to have lost a decade’s worth of jobs in less than half a year, and expanded the grant system by the equivalent of a decade over the same period. Between 2009 and 2019 the country managed to create 2,4-million jobs, while early indications are that in the last four months we may have lost as many as 2,8-million jobs. Over that same decade the number of grant recipients grew from 14-million to 18-million as more people were brought into the grant system. If the 4-million recipients of the new COVID-19 Social Relief of Distress Grant (SRD) of R350 per month keep their grants beyond October then we will have achieved a decade’s worth of expansion (an additional 4-million grant recipients) in the space of 4-months. 

As we think about the future, the key uncertainties are beginning to coalesce around three important questions, the answers to which will determine what South Africa looks like in the decade to come: (1) Who gets jobs? (2) Who gets grants? (3) What happens to growth?

If there is one thing that all South Africans agree on, it is that more jobs are a good thing. Across the political spectrum everyone realises that jobs are preferable to grants and typically come as a package deal with economic growth, which again most people think is a good thing. On the topic of  economic growth we already know the situation is dire; the Statistician General announced that the economy shrunk by 16% in the second quarter of 2020 compared to 2019 and if that trend continues for the next three quarters then the economy will have essentially shrunk by 51% (the annualised figure much touted in the media). Put differently, if this short-term drop in production and consumption is sustained for a full year, our GDP will be half of what it was pre-COVID. Such a decline is unprecedented outside of civil-wars and coups. But what about jobs? 

Three months ago we released the results of the first wave of our National Income Dynamics Study Coronavirus Rapid Mobile Survey (Nids-Cram). This is a nationally-representative telephonic survey of over 7000 South Africans asking them about their employment, income, hunger, grant receipt, and a host of demographic background questions. Using over 50 call-center agents and conducting 20-minute interviews with each participant we were able to collect vital information on how they were faring. Because they were sampled from an existing survey that was broadly nationally representative we can extrapolate our findings to the country at large. 

Wave 1 showed that about 2,8-million South Africans lost their jobs between February and April 2020 and a further 1,4-million were furloughed (that is, they did not work and earned no income, but thought they had a job to return to). We have now conducted our second wave of the survey by re-interviewing the same individuals two months later and asking them if any of these key outcomes have changed between April and June. We received 5,700 responses (81% response rate) which we can use to calculate the change in jobs from Level 5 lockdown (April) to Level 3 lockdown (June). We are also in the fortunate position of having the imminent release of StatsSA’s Quarterly Labour Force Survey (QLFS Q2) which uses a much larger sample and will also estimate changes in the labour market from Q1 to Q2. 

It is difficult to describe the situation emerging from the data as anything other than a jobs bloodbath. Of those 2,8-million job losses between February and April, essentially none have returned by the end of June. The number of those not employed in April is the same as the number not employed in June. While that may change under Level 1 lockdown (and we will be able to track this in Wave 3) – the fact that we see practically no change whatsoever is extremely worrying. Some of the good news emerging from Wave 2 was that among the 1,4-million additional furloughed workers, 750,000 (54%) were re-employed and earning an income in June. Less positively 550,000 (39%) became unemployed and 100,000 (7%) are still furloughed, with the number of furloughed workers now the same as it was pre-COVID. The fact that only half of those who thought they had a job to return to actually did does not bode well for the ‘bounceback’ hypothesis where jobs that were lost return quickly.

Figure 1: Employment status in February, April and June 2020 (millions) – NIDS-CRAM Wave 1 and 2 (Source: Jain et al. 2020)

To put some of these numbers in perspective, earlier this year the Statistician General Risenga Maluleke reported that over the last decade the South African economy had created 2,4-million additional jobs (from 2009 to 2019). If the job losses we see in NIDS-CRAM are accurate and long-lasting then we will have lost the equivalent of 10 years’ worth of job growth in the space of four months. 

This paints the national picture overall and shows a 16% decline in net employment between February and June 2020. But as with everything in South Africa, the average is uniquely misleading. Ronak Jain and her co-authors show that employment losses for manual labourers were twice as high (-30%) as the national average, while those for the tertiary educated were half as much (-8%) as the national average. Between February and June 2020 the poor were ten times more likely to lose their jobs (-31%) compared to the rich (-3%). 

Figure 2 Percentage net loss in employment between February and June 2020 by sub group (Source: Jain et al., 2020, using NIDS-CRAM Wave 1 and 2 data)

So much of these results were predictable given the way that the lockdown happened and the way that the South African labour-market works. It is a misnomer to think that the distinction is only between the ‘employed’ and the ‘not employed’, as critical as that distinction might be. There is an important sub-category of the employed, who we might call the ‘precariat’ – those without formal contracts, without qualifications and without in-demand skills. To that list we should now also add ‘ability to work from home’ since that also seems to have been critical to retaining employment during lockdown. Vimal Ranchhod and Reza Daniels show that only 24% of South Africans said they were able to work from home ‘Sometimes’ or ‘Mostly’ in June, with job losses tracking ability to work from home quite closely. The highest rates of reported ability to work from home were seen among White respondents (79%), and those with post-matric qualifications (40%) with the lowest rates for Black Africans (16%), those with matric or less (15%) and those living in Farms and Traditional areas (11-19%). If one looks at June levels of employment for these groups it is highest for White respondents (79%) and those with post-matric qualifications (65%) and lowest for Black Africans (45%) and those living in Traditional areas (38%).

It would be incorrect to jump on ‘ability to work from home’ as if that were the deciding factor – it isn’t. Each of these iterations – race, qualifications, occupation, employment protection etc. – is simply singing the same song in a different key, a common story but from a different angle. That story is one of two South Africa’s – a center and a periphery. That has always been the case in South Africa, the scary thing is that this already small ‘center’ is now contracting and the already large periphery is now expanding. 

Let us now turn to the three questions that will dictate what South Africa looks like in the decade to come: (1) Who gets jobs? (2) Who gets grants? (3) What happens to growth?

Who gets jobs?

The first of these is about the labor market: In six months time will we see a ‘bounce-back’ to some previous level of employment, even if quite a bit lower? Or will there be a further intensification of the two-South Africa’s we have always had – a shrinking center and a widening periphery. If so that would amount to a fundamental restructuring of who has jobs and who doesn’t. Given the sheer scale of job-losses to date, and the fact that there is no evidence of any bounceback between April and June, it looks increasingly likely that we’re stuck with the second option. Businesses are choosing not to rehire those they retrenched. In this time of uncertainty it would seem business owners are both pessimistic about the country’s future and also unwilling or unable to absorb the costs of re-employing those they retrenched. A cynical view is that businesses are using this crisis as an opportunity to further pivot away from labour which they see as costly, risky and possibly unnecessary. If that is the case then COVID-19 and the lockdown will have not only revealed our inequalities like never before, but actually made them far worse, accelerating a disjuncture that has been long in the making.  

Who gets grants? 

The second question of who gets grants is about social welfare and the introduction of a new type of grant bringing previously uncovered individuals into the system, the COVID-19 Social Relief of Distress (SRD) grant of R350 per month. This is available for those with no other income and no other grant. Although this was introduced as a temporary relief mechanism, there are currently serious discussions about extending this grant (and the top-ups to the other grants) beyond the end of October when they were originally meant to expire. One of the success stories of the COVID-19 period in our country is that the government has successfully created a new grant distribution system incorporating vulnerable and uncovered South Africans and doing so in a way that is both pro-poor and relatively effective. Between April and June we see rates of weekly hunger declining by 27% for both adults and children, almost certainly driven in part by the roll out of the new grants and the top-ups of the old ones.  

Given that millions of South Africans are currently left destitute without work and relying solely on these grants for their livelihoods, it is difficult to imagine a world where they are not extended at least until the end of the year if not later. Yet that introduces new complexities since what was introduced as temporary can very quickly become permanent. Put differently, the longer that door stays open, the harder it will be to shut. Treasury officials are acutely aware of this. 

In a weirdly similar fashion to the labor market, what we are seeing with grants is simply the rapid acceleration of the pre-COVID trend, which was the steady expansion of social welfare to cover more people over time. In their paper on social grants Tim Kohler and Haroon Bhorat show that the number of grant recipients in the country increased by about 4-million people between 2009 and 2019 (from 14-million to 18-million recipients). What took 10 years has now been re-accomplished in 4 months: the weighted results from Nids-Cram Wave 2 shows that by July/August 4,3-million additional people had received the COVID-19 SRD grant. (SASSA administrative data report an almost identical number of recipients; 4,4-million). 

The one key difference between the pre- and post-COVID trend is the inclusion of young unemployed men. Previously government grants were only allocated to those who could not work or somehow needed the State to act as a ‘provider’; the elderly (Old Age Pension, R1860/mo), women with children (Child Support Grant, R440/mo) and those with disabilities (Disability Grant, R1860/mo) together with a few others. Yet COVID-19 has pushed us into the realm long predicted as the end point of ‘grant-logic.’ That logic says that whether or not government’s can create jobs, they have a moral responsibility to prevent destitution at all costs. The right to some minimum amount of food or income is bound up in an understanding that all people have worth and their basic dignity must be protected, irrespective of the cost or the consequences. Grant-logic also recognises that deferring this responsibility to some future point when jobs can be found is both unacceptable and disingenuous. Johnny Steinberg made this point most eloquently in 2013 calling a spade a spade: 

“If we are honest with ourselves, we have long ago given up trying to employ everyone, or even to halve unemployment…South Africa started bleeding jobs in the mid-1970’s, along with much of the rest of the world. We have been bleeding jobs ever since…It hasn’t mattered who has been in power or whether our political system has been a racial dictatorship or a democracy, or whether our labor law has been rigid or flexible – we cannot employ everybody. We can’t even come close. To think that we can is to indulge in millenarian thinking, as if Jesus will come and remake the world, as if there is a thing called magic. Deep down, we know this. For while we talk about creating jobs, we have been doing something else – we have been handing out grants. Some say that it is a stopgap measure, just to tide us over until jobs are found. Others say that it is creating a culture of idleness from which there will be no return. But if we are honest, it is what we do now and what we will keep doing forever. It is a substitute for work and it holds the country together; it has saved millions from starvation and misery. If we accept that welfare is permanent, we must go the whole hog; we must start giving grants to the one category of poor people entirely excluded from them – young men.”   

That is exactly where we are today and now that the genie is out the bottle it will probably be political suicide to try and put it back inside. Every month that grants are paid to those who previously did not receive them (or, as we will see, any income whatsoever) further solidifies new relationships and expectations between those citizens and the State. Every month that someone does not go hungry because they receive R350 from the government, is another month they move towards being single-issue voters: ‘Kkeep the grants’. By its very eligibility criteria, the Covid-19 grant excludes anyone who receives any other kind of government grant. Thus, in almost all cases they are ‘first time grant recipients.’ It turns out that about 40% are probably also ‘first time income recipients’ in the sense that they are not only not employed, but have never been employed before. That is only possible to ascertain using a panel survey like Nids-Cram that has followed the same people over time. 

What our data shows is that of the 4,3-million Covid-19 grant recipients, about half (2,2-million) were not employed at any time in 2020, neither in June, April or even in February before the crisis. In fact about 40% of recipients (1,7-million) were not only not employed in 2020, but also not employed in 2017 when last they were surveyed in Nids-2017. For the first time, potentially in their lives, they have access to a very modest income source that is theirs. It is exceedingly unlikely they will give this up without a fight. The conceptual shift gaining ground every day, is not only that a new grant is here, but that a new grant should be here. The semantic shift from ‘Covid-relief’ to ‘Unemployment-relief’ might not sound like much, but it will become politically consequential as we approach elections.  

The ANC is fast approaching a double-bind: remove the grants and face the anger of your voter base, or keep the grants and find the money from new debt, new taxes or tackling corruption. Any of those options will anger an important ANC constituency: the ratings agencies, the tax-base or corrupt politicians. 

(3) What happens to growth? 

Economic growth is important for both of the two preceding questions – it heavily influences how many new jobs get created, as well as how much tax revenue is raised and can then be redistributed as grants. What we know so far is that the lockdown and the pandemic have been disastrous for economic growth. The International Monetary Fund (IMF), the South African Reserve Bank (SARB) and the National Treasury all estimate that the economy will shrink by about 7,3% in 2020. This is the equivalent of having the 2009 recession four times in one year. (The SA economy shrunk by 1.8% in 2009 following the Financial Crisis, according to Treasury). The President seems to be aware of this and all indications are that we will not lockdown again in the coming months, irrespective of a second wave of infections and irrespective of the death-toll. The collateral damage is simply too large. Yes, people might not be dying of COVID-19, but they are losing practically everything else that they value.

We know that children have lost 40% of the academic year, and some estimates are that we will only get back to our pre-pandemic learning trend in 2031 depending on how much catch-up there is in the years to come. Mental health across the country has deteriorated significantly with twice as many people screening positive for depressive symptoms in June 2020 (24%) compared to 2017 (12%). Those that experienced hunger ‘Almost every day or every day’ were twice as likely (44%) to screen positive.

One of the unhelpful developments during the pandemic has been the false dichotomy between ‘saving lives’ and everything else. This often manifests as statements like “saving lives is more important than saving jobs’ or ‘saving lives is more important than saving the academic year.’ Discovery Health estimates that the lockdown might have saved 16,000 lives in 2020, yet at what cost? When are we allowed to have the conversation about whether the costs that were incurred were justified to save this number of lives? To even bring it up risks accusations of being callous and insensitive. 

Of course hindsight is 20:20 and no one knew whether the death toll would be ten times higher than it was. We didn’t know if HIV and TB would increase COVID-19 death rates or introduce some other complications. There were so many unknowns and policymakers were placed in the most difficult situations of their lives. Yet, now we do know and we have for some time. Is this not just water under the bridge? What good is it now to assess whether the lockdown was fit for purpose, accomplished its goal or was the right length? The answer is twofold: (1) Unless there is an adequate recognition of the devastation caused by the lockdown, it’s possible that it will again be seen as a viable policy tool to limit infections. It shouldn’t be. It is the ‘nuclear’ option and should be avoided at all costs. And (2) It’s a mistake to think that the lockdown is over – it is still with us in innumerable ways – both in bureaucratic operating procedures (like occupancy rates in stores and queues), and psychologically  as many people are still terrified of this virus. What most people don’t realise is that about 450,000 South Africans die every year of something (illness, old age, car accidents etc). About 14,000 people in South Africa die every year from road accidents. At the time of writing 16,000 people have tragically died of COVID-19 in South Africa with projections indicating it will be less than 20,000 for the whole year. A big part of that is that, for whatever reason, South Africa’s COVID-19 mortality rate is much lower than in Europe or America, even if excess deaths are allocated to COVID-19. This is not to trivialize the coronavirus or the deaths that it has caused. It is only meant to place these deaths in perspective with the aim of having an evidence-based plan on the best policy responses to the social and economic crises that are now on our doorstep. 

So where to from here? Firstly, the lockdown was meant to buy time to prepare the healthcare system, not to prevent infections or deaths. Given the extraordinary collateral damage it should be ended immediately – in all its forms – and not reinstated in the future. Secondly, the grant top-ups and the new COVID-19 grant should be extended for a further six months to prevent hunger and destitution and maintain political stability. In all likelihood this will make them a permanent feature of South African society, and that will not be a bad thing. With millions of job losses and a fragile economy with no indication of a bounceback, more than ever South Africa needs the glue that holds it together. That glue is the grant system and while it may seem costly it seems less so when one considers the alternatives. It is also the right thing to do. 

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Nic Spaull is the Principal Investigator of NIDS-CRAM and all NIDS-CRAM papers are all available for download at: https://cramsurvey.org/reports/ and the Wave 1 and 2 data are available from DataFirst.

This article originally appeared in the Financial Mail on 30 September 2020.

Tomorrow (30 September, 12:00-14:00) we will be launching the results of the National Income Dynamics Study Coronavirus Rapid Mobile Survey (NIDS-CRAM) Wave 2. Wave 1 showed that 2,8-million South Africans lost their jobs between February and April – have they returned? It also showed that 1-in-5 experienced weekly hunger – has hunger declined as a result of the roll-out of the new COVID-19 grant and the other grant top-ups? REGISTER for the webinar where we will be discussing these issues and releasing the 15 papers that have been written on the Wave 2 results.

Earlier this week Judge Dennis Davis and I spoke about COVID-19, school closures, the National School Nutrition Programme, child hunger, NIDS-CRAM, job losses, gender discrimination and the Basic Income Grant. The full interview is available here.

There are three new pieces of writing worth highlighting on COVID-19 and schools:

(1) Today the DBE launched a report “Patterns in the COVID-19 cases among learners and staff in Gauteng schools Analysis of school-level data to 8 July” (PDF) written by Prof Martin Gustafsson in collaboration with Albert Chanee (DDG in GDE). Executive Summary below. It shows teachers have a 0.8% risk which is the same as the 0.8% risk for the general public in Gauteng.

(2) Martin’s Daily Maverick op-ed “Figuring out what the WHO is really saying about schools and the pandemic.” ‘A careful reading of the World Health Organisation’s policy documents shows that it does not stipulate when schools should reopen’.

(3) The new strongly worded position statement by the SA Paediatric Association’s on public school closures.

“The paediatric community, as represented by the Paediatrician Management Group (PMG) and the South African Paediatric Association (SAPA), is disappointed with the recent cabinet decision to close all public schools again. Following on the original SAPA position statement, supported by PMG, we believe this recent decision is not based on best available scientific evidence and it is not in the best interest of children in South Africa.”

Nationwide lockdowns and school closures have incredibly high costs for families and children. Limiting Covid-19 infections must be a top priority, but it cannot come ‘at any cost’.

These are six main reasons why schools must remain open while implementing rigorous safety protocols and physical distancing:

1. Schools provide essential meals to hungry children

When schools were open and operational, they provided a nutritious meal to 9 million children every day. Child hunger has more than doubled since the start of lockdown with 1-in-7 people reporting that a child went hungry in their household in the past week. The courts have ordered the Minister of Basic Education, Angie Motshekga to reinstate school feeding for all 9 million children immediately. Realistically, schools cannot provide meals to 9 million children if they are closed. While children do not get severely ill from Covid-19, they are at risk of suffering from stunting and malnutrition.

2. You cannot reopen the economy without reopening schools

There are 4.5 million essential workers in South Africa and 650,000 healthcare workers who are on the frontline of dealing with the pandemic. If schools are closed, what happens to their children while they are at work? We compromise the healthcare system if schools are closed. Furthermore, we have already lost 3 million jobs during 2020, plunging more than 1 million people into food poverty. Parents cannot go back to work if schools are closed.

3. There is no evidence that schools lead to above-average Covid-19 infections among teachers or pupils

It is true that some teachers have been infected with Covid-19, but it is also true that many teachers were infected even before schools reopened. Teachers are more likely to get infected in their community than at school. An analysis of 709 Gauteng schools shows that Covid-19 infection rates are no higher among teachers than similar people in the Gauteng population. Put differently, just because teachers get infected does not mean they got it at school. Further evidence comes from hospital admission data from the Western Cape during its Covid-19 surge and provides reassuring evidence. Opening schools had little impact on children getting infected with Covid-19 or getting admitted to hospitals.

4. Medical experts and advisors are saying that children returning to school is what is in the best interests of the child

The South African Paediatric Association, the Ministerial Advisory Committee and the South African Human Rights Commission have all stated clearly that they believe that children returning to school is in the best interests of children. The costs of being locked up at home (potentially alone), are far greater than the small risks they face at school. Children do not get severely ill from Covid-19. Those under the age of 20 make up less than 1% of total Covid-19 deaths in SA.

5. The World Health Organisation’s recommendation must be contextualised to South Africa

When the WHO is making recommendations, it is doing so for 195 countries. But there is no one size fits all approach. What makes sense for Germany might not make sense for Malawi. What makes sense in South Korea does not make sense in South Africa. They do not have 1 million stunted children, widespread HIV and TB, school feeding schemes etc. South Africa’s own epidemiologists are advising that schools must stay open if we are to fight the pandemic.

6. School closures will increase inequality

Only 20% of households have a computer and 10% have an internet connection. Closing schools will increase inequality between rich and poor for the next 10 years. Elderly teachers with serious comorbidities should be replaced in schools. Schools that do not have adequate masks and sanitisers should remain closed until they do, but closing all schools will hurt the poor much more than temporarily closing the 10-20% of schools that are not yet ready to open.

***

Teacher unions are undermining our pandemic response. All other government officials as well as those in the private sector have gone back to work and implemented physical distancing, wearing masks etc. But somehow teachers are different? The evidence is showing that teachers are not at higher risk than others and yet they are being paid whether they work or not. By refusing to work, they are risking the lives of children and undermining other parts of society that rely on schools at this critical time. By forcing parents to choose between going to work and taking care of their children at home, they are weakening our ability to fight the pandemic.

The question is not: “When is it safe to reopen schools?” The question is: “Does the cost of closing schools outweigh the benefits?” We should not implement a nationwide lockdown again and we should not implement nationwide school closures either. The costs to children and their families are simply too great, and importantly, fighting the pandemic needs all hands on deck and schools need to be open for that to happen. Limiting Covid-19 infections must be a top priority, but it cannot come “at any cost”.

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This article first appeared in the Daily Maverick on the 22nd of July.

Even though women have suffered two thirds of the job losses since February, men have received two thirds of Covid-19 grants (65%).

On 15 July we released the results of the largest non-medical Covid-19 research project in South Africa: the National Income Dynamics Study (NIDS) Coronavirus Rapid Mobile Survey (CRAM). It shows that three million jobs were lost during the first stage of the lockdown, and of those, two million (66%) were accounted for by women, and in particular poor women. This is a very concerning finding since there are large knock-on effects of this income loss for women and for the children who live in their households, especially when the woman is the sole breadwinner.

Perhaps unsurprisingly, given that initial job losses were so large and concentrated among women, we see unprecedented levels of household vulnerability, with half of all respondents (47%) saying that their household ran out of money to buy food in April and one in five (22%) reporting that someone in their household went hungry in the last seven days. Child hunger has at least doubled since 2018 with one in seven (15%) reporting that a child went hungry in the last week because there was no money for food.

What makes these results all the more devastating is that women are not receiving the new R350 Covid-19 grant at the same rate as men.

In a presentation to NEDLAC on 30 June, SASSA reports that of the 3.25 million Covid-19 grants paid out up until the end of June, only 1.15 million were paid out to women. Put differently, two thirds of Covid-19 grants (65%) were paid to men even though women suffered two thirds of the job losses. 

One potential reason is that people who receive other grants are ineligible for the new Covid-19 grant. For example, many women receive the Child Support Grant which has now been topped up by R500 per caregiver (note not per child). Yet, this grant is primarily for the benefit of the child rather than the caregiver. The implication is that women who have lost their jobs are being disadvantaged because they have children.

This policy response assumes that those who receive the CSG were not personally dependent on their employment or earnings to make ends meet. It is a mistake to think that those who receive grants are somehow “immune” from job losses since they already have a grant.

Gabrielle Wills’ analysis of the General Household Survey of 2018 shows that 63% of grant-receiving households report receiving some income from employment or business, and only 42% said that grants were their “main source of income”. In other words, even grant recipients depend heavily on earnings from employment. And this is not surprising, since the CSG is not sufficient to lift a child above the poverty line, let alone children and their caregiver.

Because the top-up paid for the CSG is constant, regardless of the number of children the caregiver is responsible for, the extra support is often spread very thin, and in a sense is regressive – the more children you have the less there is to go around.

Let’s take the example of a mother living with two children who has lost her job and has no other income support. Her household of three would have to live on R1,380 a month (i.e. the R440 CSG per child plus the R500 top-up). This amounts to R460 per person, which is below StatsSA’s “food poverty line” of R578 a month.

And, of course, this minimum subsistence amount does not take into account the cost of rent, fuel, electricity, clothing and other essentials. Add to this rising food prices during the lockdown, and the loss of the one meal a day through the school-feeding scheme that 9 million children relied on to meet their minimum caloric needs, and it is easy to see how quickly families can fall into destitution.

The Covid-19 grant was designed to protect those who have suffered job loss and the income they were relying on. These grants should be provided regardless of whether a CSG is being received on behalf of a child.

Why so many women are not receiving the Covid-19 grant is not clear at the moment, and Sassa should investigate this urgently. The exclusionary criterion which prevents concurrent grant-holding is likely to be a key factor. It may also dissuade women from applying in the first place. What is clear is that half as many women as men are receiving these grants and yet twice as many have lost their jobs.

This is deeply troubling and requires immediate attention.

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Nic Spaull is a Senior Researcher at RESEP in the Economics Department at Stellenbosch University; Daniela Casale is an associate professor in the School of Economics & Finance at Wits University; Dorrit Posel is Helen Suzman chair and a distinguished professor in the School of Economics & Finance at Wits University. They are also part of the Nids-Cram consortium of researchers, visit http://www.cramsurvey.org

**This article first appeared in the Daily Maverick on the 17th of July**

(The article below first appeared in the Financial Mail on the 15th of July under the heading ‘Feeding a family‘ – a slightly longer version of that article is included below.)

As the NIDS-CRAM data began to come in during the month of May, it was immediately clear that hunger was widespread. As has been reported in other articles in this edition, 47% of NIDS-CRAM respondents reported that their household had run out of money to buy food, with 22% reporting that someone in the household had gone hungry in the last 7 days. In households with children, 15% of respondents reported that a child had gone hungry in the last 7 days. These are all especially worrying, and considerably higher than anything we have seen in other household surveys. However, given that NIDS-CRAM survey is sampled to look at the entire population, we could not reliably disaggregate these results and explore the impacts on especially vulnerable groups. Two groups of people are at particular risk of long-term negative outcomes if they experience hunger: (1) pregnant women, and (2) new mothers and their young babies.

In order to sample a large enough group of these women, we conducted a separate survey, the Maternal and Child Health (MATCH) survey. This is completely independent of NIDS-CRAM. With the permission and support of the national Department of Health, we were granted access to the MomConnect platform. This is an innovative mobile-phone service and more than half of the women attending public sector antenatal care services in South Africa are registered on the platform. It is the largest database of pregnant women and new mothers in the country. Together with Professor Ronelle Burger, we drew a sample of 15,000 new and prospective mothers from the MomConnect platform with the sampling done such that it is broadly representative of the 930,000 new and prospective mothers on the platform. This was a short SMS survey with two waves of about 15 questions (in English), with mothers receiving R10 airtime per wave to thank them for their participation. The survey covers access to antenatal care, vaccinations, ART, as well as maternal hunger and maternal mental health. We will focus on these last two in this article. It must be noted that because this is an SMS survey, the number and types of questions that can be asked are limited. Mothers’ English literacy levels are also likely to affect the results.

We asked mothers “In the last 7 nights did you ever go to bed hungry?” and if they answered yes, then how many nights they went to bed hungry. Of the 2,214 pregnant and new mothers that answered both questions, 350 (16%) reported that they had gone to bed hungry at least once in the last week (246 for 1-2 days and 102 for 3+ days). More worryingly, 11% reported going to bed hungry for 1-2 nights and 5% reported going to bed hungry for 3+ nights in the last seven.

The evidence is now indisputable that in the first 1000 days (conception to age 2) a child’s brain is hypersensitive to either benefit or harm. In utero, the foetal brain grows rapidly, and after birth the infant brain grows 1% heavier every day for the first three months of life and reaches 80% the size of the adult brain by the age of 3. Because of this profound and rapid development, the foetus and the infant are highly susceptible to potential harms, including frequent hunger. The consequences of maternal and child undernutrition are enormous and include shorter adult height, less schooling, mental illness, diabetes, obesity and reduced economic productivity, and—for women—lower offspring birthweight.

From existing research, we also know that maternal hunger is a risk factor for depression during pregnancy, and that maternal antenatal depression during pregnancy is a strong predictor of a depressive episode in the postnatal period and beyond which is itself associated with a range of later negative outcomes. In addition to the hunger questions we also asked women “In the last 7 days have you felt hopeless, down or depressed?” with frequency options of a few days or most days. Figure 1 below reports those results relative to reported frequency of going to bed hungry. The trends are quite clear, and incidentally are identical for pre- and post-birth mothers. New and prospective mothers who report going to be hungry for 3+ nights in the week were eight times more likely to say that they felt hopeless, down or depressed “most days”.

In our view, new and pregnant mothers must be prioritized when targeting government relief. Many do not yet receive the Child Support Grant and are thus without that important lifeline. Maternal hunger and poor mental health can have profound long-term consequences for both mother and child.

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*Dr Nic Spaull is the Principal Investigator of the NIDS-CRAM project and the co-investigator of the MATCH study. Prof Mark Tomlinson is a Professor of Maternal and Child Health at Stellenbosch University.

**Note the MATCH data should be publicly available in the next 2 weeks.

(The article below first appeared in the Financial Mail on 15 July. The unedited version is available below and their slightly edited version is available here).

A National Reckoning

The impacts of COVID-19 on employment, hunger and inequality

– Nic Spaull

The coronavirus pandemic is the largest social and economic shock in our lifetimes. It has fundamentally interrupted everything we do and exacerbated existing problems like poverty, inequality and unemployment. The collateral damage of this one virus has been profound and will be with us for the next 10 years, if not longer. While the South African government acted swiftly and decisively to limit the spread of the coronavirus, implementing a nationwide lockdown within 7 days – arguably necessary and defensible – these mitigation measures have come at a high cost. Never before have we seen so much damage caused in such a short space of time, at least not in the last 50 years. This includes damage from the lockdown, the recession and the pandemic itself. As will become evident in this essay, the true scale of job loss and hunger throughout South Africa is difficult to fathom.  We estimate that between February and April 2020, 3 million South Africans lost their jobs, and a further 1,5 million lost their income (through being furloughed). Furthermore, losses were concentrated among women who accounted for 2 million of those 3 million job losses. Half of all respondents (47%) reported losing their main source of income. These are sobering results. In this essay I will summarize the findings of the 11 research papers that were released on the 15^th of July focusing on two related areas: employment and hunger.

Over the last three months, and together with 30 leading social science researchers, we have surveyed over 7000 South Africans from the length and breadth of our country. Using 50 call center agents and interviewing in 10 languages, we administered a 20-minute telephonic questionnaire asking respondents about their employment, household hunger, migration, and receipt of grants. This study, the National Income Dynamics Study (NIDS) – Coronavirus Rapid Mobile Survey (CRAM) is the largest non-medical COVID-19 research project currently underway in South Africa. Our sample was drawn from, and is representative of, a previous survey – the National Income Dynamics Study (NIDS). NIDS was a nationally representative sample of South Africans in 2008 who were selected to be part of the study and have subsequently been visited every 2-3 years, with follow-up surveys in 2010, 2012, 2014 and 2017. Hundreds of academic papers have been written using this study. Earlier this year we were given permission by the Presidency to use the NIDS sampling frame for a new ‘NIDS-CRAM’ study. Due to the operational constraints around surveying people during a pandemic, and the limitations of telephone surveys compared to in-person surveys, this latest iteration has a much shorter questionnaire and a smaller sample size than previous rounds of NIDS. (See also the essay by Andrew Kerr and his co-authors on representivity). While these caveats should not be brushed over, and they are readily and freely acknowledged by the researchers, it is also our view that the trends evident in the NIDS-CRAM data are indicative of the underlying labour market and welfare dynamics in South Africa today. It is also the only broadly nationally representative survey currently available.  As the authors in this special issue, we all agree with economist Stefan Dercon when he says that “waiting for better data is not an option: decisions have to be made now as this risks turning into a disaster, not just for health, but also for people’s livelihoods.” And it is to livelihoods that I would now like to turn and summarise some of the findings emerging from the data.

Unprecedented job losses

During our survey in May and June, the NIDS-CRAM survey asked respondents whether their household had lost its ‘main source of income’ since the start of the lockdown on the 27^th of March. A staggering two in five respondents (40%) reported that they had. This has profound consequences for welfare and hunger in South Africa. An underappreciated fact in South Africa is that grant-receiving-households also rely heavily on income earned from the labour market, not only income from grants. Gabrielle Wills and her co-authors show that 39% of grant-receiving-households reported that income from wages was the main source of income, compared to 70% for non-grant-households. If many people lost their job, were furloughed, or were locked-out of their income (for example informal traders), this helps explain the sharp increase in reported hunger that we see in the survey. So, how many people lost their income?

The survey asked respondents a number of retrospective questions about employment and income in both April and February allowing us to compare job losses and income losses over this period. In their paper Vimal Ranchhod and Reza Daniels find that 1-in-3 income earners in February (33%) did not earn an income in April. The weighted NIDS-CRAM data further shows that there was an 18% decline in employment between February and April 2020. In terms of real numbers, the estimate is that there were 17 million people employed in February but only 14 million in April 2020, i.e. that 3 million people lost their jobs. A further 1,5 million (9%) were furloughed. That is, they received no income but reported they had a job to return to. If these numbers are true, the scale of this job loss is unprecedented in South African history.

The next important question is who are we talking about? Who lost their jobs? Who lost their income? It turns out that job losses were most severe for those who were already disadvantaged in the labour market. The rates of net job loss are much higher for manual labourers (-24%) compared to professionals (-5%), for those with verbal contracts (-22%) compared to those with written contracts (-8%), for women (-26%) compared to men (-11%), and for those with a tertiary education (-10%) compared to those with matric or less (-23%). The graph below draws on data from the paper by Ronak Jain and her co-authors and starkly illustrates the disproportionate nature of net job losses and income losses (furlough).

Figure 1: The net percentage of respondents experiencing job loss (i.e gains minus losses) or furlough (an employment relationship but no income) in the working age population: February to April 2020

It is important to note that the data reported by Ronak Jain and her co-authors is “net job loss”, i.e. it takes account of the people (albeit a smaller percentage) who gained jobs over this period. In another paper, Vimal Ranchhod and Reza Daniels look specifically at job loss (not net job loss) among those who were employed in February, and report this by income and race (Figure 2). What is clear is that Black people were three times more likely to lose their job (28%) compared to White people (11%), and that those earning less than R3,000 a month were eight times more likely to lose their job (38%) compared to those earning more than R24,000 a month (5%).

Figure 2: Percentage of respondents experiencing job loss or furlough (an employment relationship but no income) in the working age population February to April 2020

Clearly the collateral damage of the lockdown has landed disproportionately on the poor who are also more likely to be in the informal sector, have lower earnings, are less educated, and are more likely to be Black African. This finding is corroborated by all the NIDS-CRAM papers looking at employment.

Women face a double disadvantage

One final trend that is perhaps most clear across all domains is that this pandemic and the job losses it has left in its wake have fallen most heavily on women.  Of the approximately 3 million net job losses between February and April, women accounted for 2 million, or two thirds of the total. Daniela Casale and Dori Posel show that among those groups of people that were already disadvantaged in the labour market, and already faced a disproportionate share of job losses from the pandemic (the less educated, the poor, Black Africans and informal workers), women in these groups faced even further job losses, putting them at a ‘double disadvantage.

Hunger

Given what we know now about the extent of job losses and income losses it was inevitable that household hunger would rise. This is clearly what the data shows. Half of all respondents (47%) reported that their household ran out of money to buy food in the month of April. This ‘monthly figure’ is double the ‘annual figure’ reported in the General Household Survey (GHS). 21% of households in the GHS reported they ran out of money to buy food at some point in the last year.

Looking specifically at reported hunger and depth of hunger in NIDS-CRAM, 1-in-5 (21%) respondents indicated that someone in their household had gone hungry in the past week. 1-in-8 (13%) reported frequent hunger (3+ days / week) and 1-in-14 (7%) reported perpetual hunger (every day or almost every day in the week). The same questions were repeated asking specifically about child hunger. In households with children, 1-in-7 respondents (15%) indicated that a child had gone hungry in the last week because there wasn’t enough food. 1-in-13 (8%) reported frequent child hunger (at least every other day), and 1-in-25 (4%) reported perpetual child hunger (child hunger every day or almost every day).

Figure 3: Reported hunger in the last seven days (asked separately for “anyone in the household” and children (<18 years).

Source: Van der Berg et al., 2020 using NIDS-CRAM Wave 1 data weighted.

In a set of reports that makes for disturbing reading, there is also clear evidence of altruism, sacrifice and resilience within poorer households. The best example of this is the practice of “shielding” where households report adult hunger but not child hunger. In households that experienced hunger in the past week, nearly half (42%) managed to ‘shield’ children from that hunger, despite adults going hungry in the household. Where adult hunger was less than 4 days per week, the practice of shielding is higher (47%), but where adult hunger is perpetual (almost every day or every day) fewer households seem able to shield their children from hunger since only 33% reported that children did not go hungry in those households. It would seem that in times of acute crisis, like this pandemic, many households have managed to protect or ‘shield’ their children. But this protective capacity of households has its limits; where adult hunger becomes too pervasive, households seem unable to protect their children from hunger.

While the employment losses reflect on the period February to April (and before the roll-out of the government’s COVID-19 Social Relief of Distress Grant), the hunger questions reflect on the “last 7 days.” Given that this survey was done in May and June, and that government grants were topped up from the beginning of May, these hunger figures are after households have received grant top ups (note also that these top ups were largest in May).

Capacity to prevent and capacity to provide

The severely delayed roll-out of the COVID-19 grant and UIF payments to those who have lost their jobs or incomes, reflects the difficulty of rapidly implementing social relief. This is in stark contrast to the rapid pace at which the lockdown was implemented. On the one hand government implemented a hard lockdown swiftly and severely, deploying the army across the country within 7 days of the announcement. On the other hand, government has taken more than two months to provide any form of relief to those most affected by that same lockdown. Two months after at least 4,5 million South Africans lost their income (3 million from job loss, 1,5 million from furlough) only 117,000 people (3% of that number) had received the Special COVID-19 Social Relief of Distress Grant. That 117,000 number is the official number of payouts up to the 31^st of May 2020. Clearly governments ability to prevent (travel, socialising, commerce) is far greater than its ability to provide. This lopsided capacity of government is critical in understanding why hunger has risen to unprecedented proportions.

Knowing what we know now about the collateral damage of a nationwide lockdown, including who it affects and how it affects them, as well as knowing what we know now about government’s administrative and financial capacities to provide, we should exercise extreme caution before again implementing a nationwide lockdown. While hindsight is 20:20, we can all acknowledge that the great uncertainty around the pandemic justified the lockdown (at least initially), but going forward other mitigation measures like implementing social distancing will have to be found and pursued with greater vigor. Preventing COVID-19 deaths should clearly be one of the top priorities of government, but it cannot come “at any cost.”

What is to be done?

There is a saying in banking that “it’s only when the tide goes out that you realize who has been swimming naked.” This refers to liquidity positions when there is a run on the bank or a financial crisis, but it is equally applicable here. It is only in times of crisis that we are able to see the true nature of things. In our case, the true nature of South African society. We have always known that there are large inequalities between the rich and the poor in our country, and that these inequalities are heavily determined by the colour of your skin, the place of your birth and the wealth of your parents. All of that is now uncomfortably laid bare in front of us. The pandemic has forced on us the unwelcome realization that we are only as safe as the least among us. “Your health is as safe as that of the worst-insured, worst-cared-for person in your society. It will be decided by the height of the floor, not the ceiling” (Anand Giridharadas).

We know that one of the true measures of a country is whether it can provide basic dignity for all who live in it. In our context this means enough food to eat, warm running water in a safe and dignified shelter, and access to essential healthcare and basic education. Of course, this is not the ceiling of our aspirations, which might include things like meaningful employment, higher education, art and cultural production etc. Rather we are speaking about the floor of our obligations to each other as citizens of the same country.

This is not usually something we think about when talking about budgeting, tax rates or property laws, yet it is very much at the heart of what it means to be civilized. How will we feel about our collective selves if we continue to turn our backs on the least among us simply because it is “legal” to do so? What is legal is not always ethical, and quite often not what is moral.

Which brings us back to inequality. Three months ago, Aroop Chaterjee and his co-authors published an important study analyzing South African tax data and showed that the richest 10% of South Africans own 86% of all wealth and the richest 1% own half of it (55%). Furthermore, the richest 3,500 individuals alone own more wealth than the poorest 32-million people in the country (the poorest 90%). Of course, all of this is strongly racialized. White South Africans make up the majority (60%) of the richest 10%.  One doesn’t have to be a statistician to do the maths here; white South Africans own at least half of the country’s wealth despite being only 9% of the population.

Figure 4: Shares of total South African wealth using tax data (Source: Charterjee et al., 2020: p20)

The pandemic is a rare opportunity to reflect on the country we have inherited and the country we are building. To recognize in earnest that the pre-pandemic South Africa only worked for a few and that people like me and you will have to agree (or at the very least accept) that we will need to share more of our wealth and privileges going forward. Both through new private acts of generosity and new public forms of redistribution.

That is what the situation requires. As Van der Berg and his co-authors explain in their NIDS-CRAM paper, “Social grant top-ups must continue beyond October. The severity of the economic shock and the depth of poverty make this imperative, despite fiscal constraints. Although top-ups are inadequate to compensate for other income and job losses in many households, the most common social grants, the Old Age Pension and the Child Support Grant (CSG), inject much needed financial resources into many poor households.” Furthermore, they argue that the CSG top-ups must be paid per child not per caregiver, and must increase if they are to prevent further child hunger. Gabrielle Wills and her co-authors come to a similar conclusion: “To stave off mass, chronic hunger we simply cannot let up on the support being provided to households … Failure to do so will deepen an emerging humanitarian crisis, hamper economic recovery and threaten socio-political stability.”

All of this will cost a lot money that the state does not currently have. Either we must find new social compacts and mechanisms to share wealth, income and opportunity, or we will continue towards our dystopian future, with islands of excess sitting precariously on a sea of poverty.

It is obvious that the willingness of the rich to part with some of their wealth – especially when compelled to do so via government – is far greater when there is a trust that the money will be used wisely, by competent and ethical bureaucrats and to achieve goals we can all believe in. That means that government will need to clean house and show their own moral integrity before they call on rich South Africans to do likewise. Appoint clearly competent and ethical technocrats to lead key initiatives and deliver results. Put in place consequences for non-performance and inept bureaucrats, and jail corrupt politicians. Realistic targets with reasonable time frames must be met with success or resignations. Build 400,000 new houses and apartments within the next two years. Eradicate pit-latrines within two years. What is the reason why these things cannot be done? Perhaps most importantly, a competent development State is also necessary for long-term economic growth since redistribution can only take us so far. Ultimately the economy will also have to start growing and employing large numbers of people.

While there has been some tinkering around the edges of the political and economic possibilities available to us, nothing we have done has made inroads into the gross income inequality that characterizes our country. And now with a pandemic on our doorstep, a decimated labour-market, and a hunger crisis not far behind it, where are we to turn?

One thing that is clear is that business as usual will not cut it. Like those resilient parents who manage to shield their children from hunger, it will require altruism and sacrifice. That is because, like those parents, there really are limits to the poor’s benevolence. I recall being told about a popular slogan during the democratic transition that went something like this: “If they don’t eat, we don’t sleep.”

There is no longer any room for the fat of corruption, or the waste of ineptitude. But similarly, there is also no room for those who cannot see the basic dignity inherent in all people. A dignity that is currently being eroded. I have little doubt that this pandemic will be the straw that broke the camel’s back in South Africa. Whether that is for good or for ill, remains to be seen.  I also have no doubt that South Africa has the skills and the moral conscience to forge a new and better path, but it will require decisiveness and clarity of vision, and above all, leadership.

President Ramaphosa, I know you already know this; don’t waste a good crisis. Leadership requires courage and moral integrity. Be bold.

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Nic Spaull is the Principal Investigator of the NIDS-CRAM study. The views expressed here and those of the author not necessarily those of the other NIDS-CRAM researchers. All papers are available at cramsurvey.org. and the NIDS-CRAM data is freely available for download on the DataFirst website.