The real state of the nation: how to solve long-term problems
All eyes are on President Cyril Ramaphosa to see if he can deliver on the promises made in his inaugural state of the nation address on Friday.
After months of political uncertainty, the ship — as Trevor Manual put it after the address — finally appears to have a captain at its helm. For the first time in 10 years, there is hope SA can maybe go somewhere now.
Since Ramaphosa’s narrow victory at the ANC electoral conference at Nasrec in December, the new leadership of the ruling party has hinted at adopting new policies that are noticeably more radical.
Sona took this further, outlining several bold new approaches and affirming the government’s commitment to "radical economic transformation".
As critics pointed out afterwards, the speech was thin on detail and big on ideas. And indeed, his words hold real promise for SA’s future only if they are to be accompanied by sound policy reforms based on empirical evidence.
Moving forward must lie, in large part, in understanding what has and has not worked up to now. Fortunately, there is plenty of data to show us the real state of the nation — including from the government’s own research initiatives.
The National Income Dynamics Study (NIDS), for example, is a Department of Planning, Monitoring and Evaluation-funded panel (longitudinal) study that has been following the lives of about 28,000 individual South Africans and those they live with, since 2008, with the aim of informing policy and monitoring policy implementation.
NIDS is implemented by the Southern Africa Labour and Development Research Unit at the University of Cape Town. At present, it is in its fifth data production phase, having completed its fifth wave of data collection during 2017.
The data collected by NIDS sheds much-needed light on the shifting lived realities of South Africans. Because it is a long-term study of the same people, it offers researchers and policy makers the unique opportunity to understand what is changing, or not changing, as well as what is influencing these changes (or lack of change).
NIDS provides empirical insights into various aspects of the lives of South Africans on everything from health and education, to household income and employment patterns, and points to how these are interlinked. Crucially, it also shows us what factors are effectively helping those South Africans who are currently living in poverty, from exiting poverty.
One recent analysis, which used NIDS data and data from the 1993 Project for Statistics on Living Standards and Development, for example, found that one of the main drivers of ongoing income inequality in SA was, quite simply, people’s earnings — which are inherently unequal, primarily due to the large number of people who have no labour market income, that is, no money earned from working.
More specifically, the analysis undertaken by UCT researchers Janina Hundenborn, Murray Leibbrandt and Ingrid Woolard, found, among other things, that although income inequality has fallen slightly over the past 20 years, it remains unacceptably high; and that the primary driver of income inequality is labour market income.
Within this context, one could therefore argue that the educational path to higher earnings is important as it offers South Africans a route out of poverty.
For this reason, the government’s commitment to former president Zuma’s parting gift of free higher education to poor households must be welcomed.
NIDS data has pointed to the reality that access to post-secondary education, and by extension the potential for higher earnings, is constrained by socioeconomic circumstances. The analysis by UCT researchers Nicola Branson and Amy Kahn found that poorer households have lower levels of enrolment in post-secondary education, with university enrolees having better academic performance and tending to come from higher-income households.
This lack of access to post-secondary education in turn contributes to skills shortages, which leads to high rewards for the skilled and lower rewards for the unskilled. Essentially the unskilled are more likely to remain poor — and so are their children.
Moreover, their analysis found that enrolment patterns of Technical and Vocational Education and Training colleges (TVETs) and universities seem to be due to a combination of socioeconomic status, scholastic performance (only about half of youth starting school finish secondary school, and very few of those qualify to enrol at university), and financial means (which suggests insufficient opportunities for funding).
But before we get too enthusiastic about free higher education, additional analyses using NIDS data have shown that factors contributing to access to education, and ultimately to earning potential, effectively start at birth. According to an analysis by Daniela Casale, the nutritional health of the child from birth can have a profound impact in later years.
Casale’s paper analysed data from children over a period of eight years, through four waves of NIDS data collection, using information such as height-for-age and body mass index (BMI) as measures of stunting and obesity respectively. These, in turn, were taken as measures of poor nutrition.
The analysis found that children who were stunted routinely performed more poorly than their peers, and that the negative impact of their poor nutrition was sustained. Children who were stunted had completed fewer years of schooling by age 14 and this may later end up giving their peers a head start in the job market.
Even after controlling for age at first enrolment, the analysis showed that stunted children tended to progress through the schooling system slower, meaning a potential reduction in their lifetime earnings.
In this light, Ramaphosa’s commitments to focus more policy attention on early childhood development must also be welcomed.
Putting together the findings of these and other analysis based on NIDS data (of which there are many), delivers a dismal "state of the nation".
Income inequality remains high, with barriers to education performance and earning potential linked to poor nutrition and financial access to post-secondary education — creating a self-perpetuating cycle.
Honest, solution-driven policy must consider empirical data, such as that produced by NIDS, and offer integrated support to tackle these challenges, and there are multiple areas that can contribute positively.
Social grants, for example, as Ramaphosa alluded to in Sona, have had a demonstrable impact during the period covered in Hundenborn, Hundenborn, Leibbrandt and Woolard’s paper, when average income from grants more than doubled, as did the proportion of households receiving them.
Their analysis further showed that government grants have proven to be one of the core factors lowering overall income inequality and reducing the constraints for very low-income households over the past two decades — but they are not sufficient. We urgently need to find ways to also boost people’s earnings through skills development and job creation.
Sustained nutritional support at preschools and schools, additional funding reforms that enable greater access to post-secondary education across the economic spectrum, and long-term policy reforms that create an enabling environment for entrepreneurs and job creation all hold potential for real shifts.
Undoubtedly, Ramaphosa and his new team have their work cut out for them. Fortunately, the evidence that can help them make the best choices possible is there — should they choose to examine it.
• Richmond is senior operations manager at NIDS. NIDS data is freely available to all researchers, policy makers and journalists.