In South Africa, informal work is a feature of the labor market - one in six South African workers is employed in the informal sector. During the pandemic, millions of workers without legal or social protection were disproportionately affected by the negative impacts of measures to prevent the spread of COVID-19 (loss of jobs, hours of work and income...). As a "forgotten" sector in many ways, it should not be forgotten that the informal sector provides livelihoods, employment, and income for millions of workers and business owners, and contributes significantly to the country's Gross Domestic Product (GDP). 

In response to the social and economic effects of the pandemic on vulnerable groups, the South African government has further developed its social protection system. As part of the social assistance component of the COVID-19 stimulus package, it introduced a new Social Relief of Distress (SRD) grant in April 2020. This social assistance grant is for the first time targeted at many informal workers on the basis of their employment status.  

While the positive links between the subsidy and economic activity had already been studied, as well as the limits to this interaction, it remained to be understood whether and how the SRD had been used by informal workers and what economic effects had been generated. This project was conducted by CSDA as part of a larger program to analyze various components of the South African government's Covid and recovery stimulus package.

This project is part of the Extension of the EU-AFD Research Facility on Inequalities (RFI). Coordinated by AFD and financed by the European Commission, the Extension of the RFI will contribute to the development of public policies aimed at reducing inequalities in four countries: South Africa, Mexico, Colombia and Indonesia over the period 2021-2025.

To better understand the effects of the Covid and recovery public policy stimulus on reducing inequality, this study qualitatively analyzed the interactions and impacts of the SRD (as well as other subsidies, and the stimulus package more broadly) on local economies.

In particular, it focused on the experiences of women and men traders in the informal sector, who represent a significant proportion of informal sector workers. Through the data collected, differentiated patterns by gender, location, and level of the informal worker in his or her work organization have also been revealed.

 

You will find below the research paper related to this project :

The local economic development effects of income transfers. The Social Relief of Distress grant.

Contact: 

• Anda David, AFD Research Officer

The Covid-19 pandemic has forced societies around the world to make difficult trade-offs, as they try respond to the public health crisis on one hand, and to the economic and social distress arising out of it on the other. In South Africa, these combined crises have exacerbated already high levels of unemployment, deepening poverty and heightening levels of hunger and food insecurity.

To mitigate the combined health, social and economic crises stemming from the Covid pandemic, South African President Cyril Ramaphosa announced, in April 2020, a range of support measures to mitigate their impact, including emergency social protection and employment stimulus measures.

Find out more about the Extension in South Africa

This research project aims to study the local stimulus effects of South Africa's PES and national social grants program. In order to do so, it brings together a wide range of existing and new data sources, such as shopper data provided by Shoprite Checkers and programme participant data from Harambee Youth Employment Accelerator, which are securely merged while preserving individual anonymity using local tech company Omnisient’s proprietary encryption technology. 

The primary research focus will be on the multiplier effects of these two programs, that is, the effects of the programs on the economy beyond the direct impact of spending on program participants and their households.

These program-specific multiplier effects are crucial to the overall evaluation of the programs, particularly in the context of budget constraints, but are difficult to identify in a credible empirical manner given the lack of work on them in South Africa. 

In studying them, this project thus has the dual objective of characterizing the spending patterns of stimulus beneficiaries and then examining how such spending is likely to stimulate economic activity in industries further up the product supply chain. Much of the analysis proposed is descriptive and extrapolative rather than causal when it comes to quantifying multiplier effects. 

Thus, the overall goal of this research is to provide an incomplete but conservative and credible quantitative baseline for thinking about program-specific multipliers in South Africa, in an environment where such evidence is lacking.
 

The publications and webinars related to this research project are available below.

• Anda David, AFD Research Officer 

South Africa’s spatial inequality translates in significantly different lived experiences among members of different communities across the country. Statistics South Africa gathers data on a range of socio-economic outcomes of individuals and households through an array of national surveys; these data can be analysed at the national, provincial, district and sometimes municipal level, and provide us with a sense of well-being, deprivation and inequities in these, between these different geographies. However, there is not yet one standardised set of data that would allow for a coherent, systematic and longer-term understanding, visualisation and tracking of a broad set of indicators on well-being, that allows for a better understanding of socio-economic outcomes at the community level. Yet, understanding this local context is important, as it is within that local reality that policies and interventions aim to make a difference. South Africa’s government has recognised this too and, with the introduction of its District Development (DD) Model, aims to see different spheres and departments of government work together for larger impact, “higher performance and accountability for coherent service delivery and development outcomes”. A consolidated, central point of information that is accurate and regularly updated, would provide a strong basis for the implementation South Africa’s DD Model. 

This project therefore proposes the development of an interactive, online Community Explorer that would allow researchers, policy-makers and civil society members to build a stronger understanding of well-being at the community (or main area) level in South Africa. Such an understanding is crucial to inform development efforts implemented at that community level. We suggest drawing on the local level information for the Steve Tshwete municipality to pilot the Community Explorer approach.

The local municipality of Steve Tshwete is part of the Mpumalanga province, an area that is home to one of the country's largest coal mining areas and accounts for 83% of the coal produced in South Africa. Steve Tshwete can be considered as one of the commercial centers of this province, with one of the largest local economies in the district dominated by the mining, manufacturing and financial sectors. As such, coal mining and the three coal-fired power plants currently in operation are by far the largest contributor to local employment, accounting for 40% of it. 

This project is part of the Extension of the EU-AFD Research Facility on Inequalities. Coordinated by AFD and financed by the European Commission, the Extension of the Research Facility will contribute to the development of public policies aimed at reducing inequalities in four countries: South Africa, Mexico, Colombia and Indonesia over the period 2021-2025.

This project proposes to leverage the data and tools already available on the South African Youth Explorer (and the related WaziMap tool). The SA Youth Explorer is a SALDRU-led project that constructs and maps a range of indicators that measure key dimensions of well-being among young people, at various geographical levels. Using Census 2011 data, these indicators are currently constructed for the following domains: demographics, education, living environment, economic opportunities and youth poverty (including income poverty and multidimensional deprivation). In addition, the project has begun the construction, verification and maintenance of a central database of service provision, that allows for government-provided services to be mapped down to the main area level.  Finally, it is the project’s aim to explore the possibilities of adding a third layer of knowledge with local labour market demand side information. As such, the overall aim of the proposed project is to provide “an understanding of the functionings of geographical areas as economic and social systems” and thereby “to promote the construction of an integrated and effective” approach to policy and planning that would ultimately contribute to the social betterment of all.

In addition, the project will use the administrative South African Revenue Service (SARS) and National Treasury (NT) Firm-Level (SARS-NT) Panel data developed as a joint SARS–National Treasury–UNU-WIDER initiative which gives matched employee-employer level information and thus allows computing labor market demand indicators. The greatest advantage of the administrative SARS–NT Panel data over other firm-level surveys is that it allows us to have employee-related information such as income, age and gender, as well as firm-level information such as labour costs, gross sales, industry sector, firm age, productivity, firm size, learnership and training cost .  Another advantage of the administrative SARS–NT Panel data which is important for the project is that the worker and firm information can be aggregated to four different geographical levels, namely: province, district municipality, local municipality, and main place . With these geographical levels, it is possible to create local averages of various worker and firm variables that can then be mapped alongside Higher Education Institutes present at the local level.

 

You will find below the different research papers related to this project : 

- Developing a Youth Labour Market Index for South Africa at the sub-national level

- Youth and the just transition. A profile of young NEET in Mpumalanga

Contact: 

• Anda David, AFD Research Officer

In Mexico, more than 40 percent of the population is under the official poverty line. At the same time, Mexico is characterized by a society in which the socioeconomic origin condition is highly related to life achievement, especially on the extremes of the socioeconomic distribution (Vélez-Grajales et al, 2014). On this matter, empirical evidence shows that once the population is divided by quintiles, 48 out of 100 that were born in the lowest quintile stay there for the rest of their lives. Above the rest of them, i.e. those who are able to move to another quintile, 22 reach the second quintile. In summary, previous result leaves in poverty 70 percent of those with origin in the first quintile. It has to be noted that only 4 out of 100 that were born in the lowest quintile will move up to the top quintile.

On the other hand, above those that were born in the top quintile, 52 out of each 100 stay there for the rest of their lives. Moreover, above those that experience downward mobility, 28 out of each 100 move to the fourth quintile, i.e., 80 out of each 100 that were born in the top quintile will stay at least in the fourth quintile. Finally, it has to be noted that only 2 out of 100 that were born in the top quintile will move down to the lowest quintile. This means social mobility is very low.

This project is part of the first phase of the Research Facility on Inequalities, coordinated by AFD and funded by the European Commission's Directorate-General for International Partnerships over the 2017-2020 period. The first phase of the Facility has led to the conduct of 22 research projects and the publication of around 100 research papers and policy briefs.

How are economic inequality and social mobility related? Is it possible that the highest levels of socioeconomic persistence (lower social mobility) in terms of origin determined, in part, both perception and tolerance against economic inequality? The Mexican case, which is one where socioeconomic regional disparities are significant, represents a good option to analyze if such relationship holds. Moreover, there is still a gap in the literature for explaining the mechanisms behind the observed negative relationship.

Additionally, an important and relevant unanswered question for the Mexican case is the perception of Mexicans about inequality and social mobility levels. What if Mexicans think that the country is one of equal opportunities and results for all? Policy implications should be different among different perception scenarios. In any case, it is necessary to get information in order to understand the mechanisms at household and local level that explain the potential distance between perception and reality.

First, using a multivariate analysis method, relative intergenerational mobility can be estimated for each macro-region of the country. Several inequality measures will be estimated, but for several points in time. The researchers have chosen to do so because it is possible that not current but origin economic inequality is the relevant one for intergenerational social mobility. Once the relationship is estimated, a discussion on the mechanisms behind it should be developed. The empirical analysis will be mainly based on the “Encuesta ESRU de Movilidad Social en México 2017”.

Additionally, work with groups in 4 different cities with different levels of socioeconomic performance will be held. The researchers expect to do fieldwork in at least two different spots within each city: one for a group of medium-high socioeconomic level and one of medium-low socioeconomic level. The interview will include a measure for both inequality and social mobility. In such a way, the researchers will be able to understand in a better way the relationship between perceptions and objective measures on the variables of research interest.

See this project's 2 minutes pitch from Alice Krozer, researcher at Colegio de México:

You may find the research papers and the policy briefs linked to this project here :

Research papers:

- Social mobility in Mexico. What can we learn from its regional variation?

- Perceptions of inequality and social mobility in Mexico

Policy briefs:

- Wide regional differences in social mobility across Mexico

- Inaccurate public perceptions of inequality and social mobility in Mexico

Find the presentation of the research paper "Perceptions of inequality and social mobility in Mexico" by Aurora Ramirez Alvarez (Colegio de Mexico) during the first webinar of the Research Facility on Inequalities: 

Contact:

• Anda David, Research Officer, AFD. 

Contacto: 



Anda David, coordinadora de investigación, AFD.