Cape Town - The government has missed its deadline to submit its social security plan to the National Economic, Development and Labour Council (Nedlac), which bodes ill for its attempts to avoid a downgrade to junk status.
The plan was meant to be presented by Treasury and the Social Development Department last month following public assurances from Deputy President Cyril Ramaphosa.
It is understood the Labour and Community departments are still bickering over the details and costing of the plan and each still have separate documents.
The Social Development Department released a report last week warning plans to reform the country’s retirement funds should not happen as long as there is no comprehensive social security plan.
The Comprehensive Report on the Review of the White Paper for Social Welfare, 1997, has not been made public yet as it still needs to be discussed and approved by the cabinet.
“Cabinet should adopt the proposals within the next six months. Adoption of the reforms as a comprehensive package should reduce the possibilities of resistance as happened when measures related to the withdrawal of provident fund contributions was introduced without the full reform package having been adopted,” it says.
This is in line with warnings from civil society that the Treasury cannot expect workers to not have access to their retirement funds.
The report gives insight into the thinking of Social Development Department on a social security plan.
It acknowledges South Africans who fall into the working age population and are unable to support themselves and their families, are not adequately supported.
It says the country needs to determine a set of services to which all South Africans in particular categories should be entitled.
Once a social protection floor has been established, current services need to be assessed and a plan developed to ensure this floor is implemented within a three-year time frame.
Isobel Frye, who heads the Studies in Poverty and Inequality Institute, said as long as the country did not deal with this, inequality and poverty would remain high.
“The trickle down (of wealth to the poor) has not worked. Why are we still doing it? The rating agencies have warned us about poverty and inequality, but nobody wants to venture into new policy initiatives,” she said.
Frye said if the basic income grant had been implemented in 2004, the poverty gap would have been reduced by more than 70 percent.
Frye dismissed business and Treasury concerns around a social security plan being too expensive. She said money to fund the plan would be available if the state stopped illicit capital outflows, which were believed to between $122 billion between 2003 and 2012.
Also while labour believed the nearly R100bn surplus in the Unemployed Insurance Fund (UIF) should belong to workers, Frye said it could also help funding.
The Treasury said there was a draft on the plan but Social Development had reservations about it, and told Parliament’s finance committee in August that progress was slow.
On Social Development warning that a plan should be in place before retirement reforms happen, the Treasury said: “This matter is not as simple as suggested and is also dependent on affordability, economic growth that will determine how comprehensive any package is.”
The document would only be handed over once it got approval from both ministers and the cabinet.
WEEKEND ARGUS