SINDILE VABAZA: The price of unemployment is death and domestic violence

According to the 2020 Global Peace Index compiled by the Institute of Economics & Peace, violence costs SA about 13% of its GDP per year. The country ranks 26th in the world at a total cost of $97.4bn, or $1,971 per capita. The two main factors are violent crime and homicides.

Some areas, such as parts of the Cape Flats and Nyanga in Cape Town, and Umlazi in eThekwini, have murder rates higher than some war zones, the report says. According to the index, SA is in the bottom 20 in the world when it comes to societal safety and security — worse than Syria, Iraq and Afghanistan.

SA has historically scored poorly in areas such as perception of criminality; easy access to weapons; relatively high levels of political terror; and high levels of violent demonstrations.

In a report titled Too Costly to Ignore: the economic impact of gender-based violence in SA, auditing group KPMG estimates that domestic violence costs the economy between R28.4bn and R42.4bn annually, or between 0.9% and 1.3% of GDP. The report adds the figure is conservative fgiven the under-reporting of domestic violence and some key data gaps that prevent more robust analysis, and that the real cost is therefore likely to be significantly higher.

What is clear is that the high rate of violence in SA has dire social and economic costs through lost productivity and lost income for victims. Moreover, the reduction in output is even larger because of the economic multiplier effect, which means a rand lost represents more than “just” that rand; it represents the lost savings and spending that are passed on to others to save and spent many times over as money circulates through the economy. When violence is reduced resources can be reallocated to more productive uses that result in economic growth — a multiplier effect that serves to augment that growth.

The cost to the public 

There are also cost implications for the public purse as victims will use more police services, healthcare services and  choke the criminal justice system. The more violence there is the more resources the government is forced to allocate towards these services to serve victims.

Put another way, R28.4bn (the lower cost estimate of domestic violence) could pay all child support grants for the next eight years, or fund more than 200,000 primary school teachers’ salaries for a year, or pay 900,000 engineering students’ tuition fees.

Unemployment and domestic violence research by an international team including Prof Sonia Bhalotra of Warwick Economics and the Cage Research Centre of the University of Warwick, found a strong link between job loss and domestic violence. Men who lose their jobs are more likely to inflict domestic violence, while women who lose their jobs are more likely to become victims. The increase is upwards of 30%.

The study, Domestic Violence: the potential role of job loss and unemployment, was based on big data from Brazil that analysed court registers of every domestic violence case during 2009-2018. In this period there were 2-million domestic violence cases, representing 11% of all criminal justice cases, which were then linked to employment registers with details of about 100-million workers, 60-million employment spells and 10-million layoffs per year.

The study also included measures of domestic violence that do not rely on victims reporting the event to the police. These were indicators of women using public shelters from domestic violence, and notifications of domestic violence by health providers mandated by the federal government.

During the height of the Covid-19 pandemic and lockdowns, when many people lost their jobs and businesses and many others were forced to stay at home, there were significant increases in domestic violence all over the world.

The cost to society

In a study titled Long term unemployment and violent crimes that used post-2000 data to reinvestigate the relationship between unemployment and crime, authors Daniel Almen and Martin Nordin of Lund University concluded that long-term unemployment exhibits a strong association with violent crimes in addition to property crimes.

Young men who are unable to secure employment and become idle and unemployed over the long term struggle to attract romantic partners and therefore to build families and invest in community and societal stability. That is why polygamous societies, often born of gross inequality, have always been the most violent and warlike societies. Young men need a path towards stability and that often begins with securing decent employment.

For SA to begin to address the country’s many social problems and stymied economic growth, policymakers should prioritise policies that create job-intensive economic growth, especially for low-skilled men who have been unemployed for extended periods. Labour laws need to be reformed, including doing away with minimum wage legislation and ensuring employers have labour market flexibility.

Collective bargaining agreements, a tool that allows employers and union representatives to set the conditions of employment for millions of workers in a particular sector, should be done away with; none of the parties involved ever consider the interests of the unemployed. These collective bargaining agreements are anathema to small businesses, which struggle to comply with them and so have their growth and ability to hire stunted.

• Vabaza, an aspiring economist, writes for the Free Market Foundation. The views expressed in the article are not necessarily shared by the members of the foundation.