By: Hein Marais
According to economic geographer David Harvey ‘labour is becoming less and less significant to how the economic engine of capitalism functions’ across the globe. If this is true, how are millions of people to survive without an income and what does this mean for arguments being made for a universal basic income? In this second article of the series, Hein Marais explores the issue.
We have been schooled to believe that working for a wage or salary provides a passport to a life free of want and filled with good prospects. And we are routinely told that a simple formula underpins this state of affairs: the right policies lead to economic growth, which then generates jobs, while in the background, regulation ensures that the jobs are relatively safe and well paid.
But what happens when the formula does not work? When the jobs do not materialise, or are only sporadically available, or pay poverty wages? This is the lived reality for hundreds of millions of people across the world, and their ranks are growing. The global employment rate has been falling steadily, from over 62% in the early 1990s to about 57% in 2019 and even lower during the Covid-19 pandemic.
It’s not just a matter of jobs becoming scarcer; they’re increasingly insecure and badly paid. That’s because many of the gains workers won from the late 19th century onward have been clawed back in the past three to four decades.
Work that is decently paid and stable is very rare in “developing” economies and it is becoming increasingly atypical in “developed” ones.
Even the International Labour Organization acknowledges now that “employment is not a guarantee against poverty”. It estimates that more than half of workers in Africa and one fifth of the 3.3 billion people employed worldwide in 2019 (or 630 million people) were living in “extreme or moderate poverty” (that is, they were living on less than US$3.20 per day in purchasing power parity terms).
The working lives of vast numbers of people entail a stuttering succession of unpredictable, piecemeal and poorly paid jobs, often separated by long periods of little-to-no working income. Not having paid employment is an obvious and major cause of poverty, but the inverse is not necessarily true: having a job is very often a deficient defence against poverty and hunger.
These trends are on grotesque display in South Africa. The (narrowly measured) unemployment rate has topped 20% since at least the early 1990s. In mid-2022, as the Covid-19 pandemic continued, it reached 34%. If people who had stopped looking for work were included in the calculations, almost 45% of working-age South Africans were unemployed.
Our economy is structured in ways that generate great wealth, but without the paid labour of close to half the adult population.
The core problem is not unique to South Africa – economic geographer David Harvey noted several years ago that, globally, “labour is becoming less and less significant to how the economic engine of capitalism functions”.
But here it is anchored in our history and reinforced by our macroeconomic, trade and industrial policies.
Underpaid and precarious employment
Not only are jobs scarce, but having one doesn’t mean you won’t be poor.
Close to 40% of people with paid work in South Africa do not earn enough to regularly afford the basic living expenses of their households. Earlier research showed that almost one fifth of workers in the formal sector were living in poverty.
Companies have outsmarted labour policy changes and succeeded in imposing new paradigms of work. They rely on a small core of skilled, full-time workers and a larger stock of less-skilled, on-call workers who are deprived of the wages and benefits enjoyed (for now) by their better-off peers.
Unsurprisingly, inequality in earnings among workers has increased in the post-apartheid period, in line with global trends.
The country is caught in a longstanding crisis of waged work that extends across periods of modest economic growth and despite successive national development strategies and labour market reforms. Outright joblessness, along with sporadic, badly paid work, is the overriding reality for a majority of working-age adults in South Africa. Their livelihoods rely on juggling erratic economic activities, recycling debts, laying claim to remittances, and bartering.
In 2019, even before the Covid-19 pandemic struck, more than half (55%) of the population was somehow surviving on less than R1,000 per month and 25% was living in food poverty, according to World Bank data.
Yet our social policies remain wedded to the compounded fiction that paid work is available to those who seek it and that the work brings security and comfort. Income support is therefore available chiefly to people who, due to age or infirmity, cannot work (children, the elderly or disabled persons), and those whose (lost) jobs included unemployment insurance.
The fragility of agrarian livelihoods, aggravated by climate change, and the blurring of informal and formal work make it ever more difficult for households to diversify their livelihoods in ways that avoid complete dependence on having a job. Their reliance on steady, decently paid waged work is increasing, while their access to such work shrinks. All this while battling the Aids, Tuberculosis and Covid-19 pandemics, contending with climate change-triggered droughts and floods, and being betrayed by decrepit governance.
Growth and job creation remain the lodestars for policymakers, though, as they try to reproduce a time when jobs were plentiful, secure and decently paid. In fact, that gilded period existed only fleetingly and very unevenly – for a few decades in the mid-20th century and almost exclusively in North America and Europe. In South Africa, it was reserved for whites only.
The reality today is that many millions of people are trapped between an economic and social order that insists they sell their labour to “earn” the chance of a relatively dignified life, and an economy that only needs the labour of a fraction of them. Little wonder that the demand for a basic income guarantee is gaining traction.