Covid-19: Towards a safer, more cautious and more equitable opening of the economy in SA

Here is a link to the IEJ Policy Brief 

Lives or livelihoods?

The pandemic during the hard lockdown and the opening up of the economy has devastated both lives and livelihoods.

As of 21 July 2020, Covid-19 has claimed more than 5,000 South African lives and our infections are growing exponentially. Our caseload puts us fifth in the world behind the United States, India, Brazil and Russia, countries with significantly greater populations.

Recent studies reveal the devastation that the hard lockdowns and lack of adequate state support caused to workers, households and businesses while failing to adequately manage the pandemic. This is causing some to call for the total opening up of the economy, amid growing pessimism about the state’s capacity to assist people effectively in the face of the pandemic — to protect either health or economic activity.

At the same time, evidence is overwhelming that the way in which the economy has opened has led to a massive surge of infections while not substantially improving the economic situation of many households and businesses. The explosion of infections is now leading to calls for more hard lockdowns, the closing of schools and so on. These two approaches, which respectively prioritise livelihoods or lives are fundamentally incompatible. Both, unfortunately, are destined to fail.

The policy brief released today by the IEJ proposes a different approach to managing this extremely difficult challenge.

IEJ COVID 19 Policy Brief Series 2 Compact 1

We need both a more effective public rescue package as well as a different approach to managing the opening up of the economy, which addresses the connected challenges of protecting lives and securing livelihoods, given South Africa’s specific realities. The reopening of the economy will be safer and more equitable if we find ways to effectively share the costs of the needed adjustments, and make a more concerted and deliberate effort to extend support mechanisms to the vulnerable.

The Institute for Economic Justice has written extensively about the economic rescue package that is needed to assist workers, households and businesses to deal with this crisis. Here we focus on a set of related issues which need to be addressed in order to manage the opening up of the economy more safely and equitably.

The present approach

Contrary to World Health Organisation (WHO) advice, South Africa’s opening of the economy is occurring before the epidemic has peaked. This has led to a surge in infections. During June, national infections increased fivefold, with more dramatic numbers expected into July and August. The Gauteng provincial government has openly considered harsher lockdown restrictions as it becomes the nation’s new Covid-19 hotspot.

Despite this, the president announced on 12 July that the relaxed Level 3 restrictions were being maintained, with further relaxation of taxi occupancy rates (although the sale of alcohol has again been banned, and a curfew reintroduced). The state argues that a rapid relaxation of restrictions is needed to weather the economic storm.

There is no doubt that an indefinite closure of the economy is unsustainable, but the reasoning that informs our relatively rapid, and unmanaged, opening up of the economy fails to appreciate the relationship between human well-being and the economy and discounts the unequal burdens that this opening up imposes on our population.

South Africa needs a more managed and cautious reopening, combined with a significant upscaling of state support mechanisms to protect those whose health is most at risk, and the socially vulnerable. This is an approach more rooted in the reality of our vast inequalities, inequalities which have been exacerbated by the Covid-19 shock.

Integrating well-being and a social comorbidity framework 

The fundamental problem with the government’s risk-adjusted strategy is rooted in its conception of health and economic needs as constituting dual — and often competing — imperatives. The issue then becomes how to balance these complementary, yet relatively distinct, goals.

A better approach would be to view socio-economic performance and outcomes as including workers’ health, safety and well-being. This would see economic performance and human well-being as fundamentally intertwined.

There are indications that such an approach works in fighting Covid-19 and the consequent social crisis. New Zealand, which recently celebrated the “elimination” of Covid-19 in early June, did not rush to rapidly open the economy and when it did, the state ensured that significant emphasis was put on worker safety. By contrast, countries and regions which decided to prioritise opening up economic activity in the short term, like Sweden and certain states in the United States, have not only struggled to combat the outbreak of the disease, but have also not experienced a positive improvement in the narrow economic outcomes desired.

It is clear that a measure of economic performance which does not factor in the immediate health, safety and prosperity of the workforce will be insufficient to meet our current needs.

Rather, we need to centre health risks, the unequal burdens that a return to work has on the workforce, and a series of “social comorbidities” rooted in our country’s wide levels of income, spatial, gender, racial and wealth inequality.

People are not only vulnerable to Covid-19 due to health burdens such as diabetes and high blood pressure, but because they live in dense neighbourhoods, go without running water, use overcrowded transport, or work for businesses that do not adhere to necessary health and safety regulations.

This toxic mix is visible, for instance, in the Covid-19 outbreaks in dense informal settlements and workplaces with lower-income workers in mining, manufacturing, retail and services, sometimes due to poor implementation of health and safety protocols. By contrast, higher-income earners and managers can avoid risk by working from home. People who live in the suburbs and rely on private transport are also relatively shielded from work. 

What should be done? Some concrete proposals 

We need to begin by dispensing with the idea that fighting Covid-19 is the responsibility of the individual, as the government has come to frame it. It is concerning that the state appears to be seeing a return to economic activity as a substitute for its obligation to provide appropriate economic and social support to the vulnerable. Such an approach also works to obscure the responsibility of business to prioritise the public interest.

In the immediate term, we need policies that will democratise the reopening of the economy and maximise and target support on the basis of a broader conception of vulnerability that includes health and social risk.

We can democratise the return to work through ensuring proper union and worker oversight of health and safety measures and appointment of compliance officers; regular inspection of businesses and issuing of compliance certification; strengthening the right to refuse to work in unsafe conditions; and stringent sanctions on employers for failure to comply with health and safety regulations.

We can more equitably share the costs and burdens of reopening the economy by providing a wage premium for high-risk occupations; wages for furloughed workers; income support for quarantined workers; and unemployment insurance and business support for the informal sector. Short-time work should be adopted to prevent retrenchments (as has been successfully adopted in Germany) together with a strategy to move towards a shorter working week. Changes to the wage structure to reduce executive and management pay and make it more equitable will assist in funding some of these measures. The CCMA requires additional funding rather than the proposed cuts. Finally, workers requiring Covid-19 testing in private health facilities should have these costs covered by their employers.

We can mitigate health vulnerability through protecting the safety of vulnerable and quarantined workers, preferably through fully paid leave and cash allowances; ensuring that elderly and vulnerable persons within communities receive targeted and sufficient income, food, and healthcare services; deployment of community healthcare workers is increased; and ensuring that there is no shortfall in treatment for individuals with other chronic diseases, such as HIV, TB and mental health needs

We can mitigate social vulnerability to facilitate a reopening of the economy through:

• Improving income support, particularly through extending and increasing social grants including through a basic income grant, and expanding wage support;


• Improving access to water, sanitation, PPE and food in townships, and improve quarantine centres;


• Increasing health budget allocations, support the local manufacturing of testing kits, and ensure proper resource sharing with the private sector;


• Improving related school infrastructure and access to PPE, water, and sanitation while providing safe and reliable scholar transport;


• Expanding transport options, in particular rail, and make travel safer, in particular via evidence-based occupancy limits for taxis; and


• Targeted support for women through relieving the burden of care, increased income support, expanded safe community childcare and proper support programmes and facilities confronting gender-based violence.

These proposals are outlined in more detail in the IEJ’s policy brief.

The necessity for a transformative state 

It is clear that navigating the reopening of the economy and the management of the health and social impacts of the disease in this way requires decisive state action that is proportional to the scale of the crisis created by the Covid-19 outbreak. That leadership should be rational, consultative, transparent, and prioritise the needs of the poor.

After the government’s initial impressive action, serious governance problems have emerged. This is indicated by police militarism and brutality, opaque governance structures and decision-making processes, inconsistent and seemingly irrational legislative decisions and inadequate and poorly administered economic relief measures — all of which have undermined government’s leadership role and led to an erosion of public trust.

To turn this around, the government must, in the short term, commit to scale up its economic and social support commitments and improve on its communication with the public.

We need the state to follow through on commitments to a genuine and proportionate rescue package while reversing austerity measures. The Treasury’s Supplementary Budget stands in direct opposition to current needs (see IEJ, BJC, Isaacs, Coleman and Gqubule). The state also needs to investigate corruption in the allocation of government support programmes and prosecute guilty parties, implement regulations and conditionalities for government support in the public interest and improve state communication to build public trust and inspire necessary behavioural change and diligence.

Towards a just recovery 

There is evidence that a call for a more managed reopening up of the economy is gaining favour within public discourse (see Makgetla and Masie).

Adopting an approach mindful of South Africa’s systemic inequalities that does not force individuals to choose between their lives and livelihoods will lead to better health and economic outcomes — collectively, a better social outcome.

Beyond this, measures implemented now must support the aim of building a “new economy”, as the president has called for. This new economy must be more democratic, equitable, and just. Even previous advocates of economic orthodoxy (see Globe and Mail and Financial Times) accept the need for implementation of radical social reforms and conscious efforts at redistribution. Such policy measures increasingly enjoy the support of the global public.

The short and medium term are intertwined. Additional fiscal support measures now, for example, must be complemented by a significant stimulus package. Similarly, measures to empower workers or expand social security in the short term lay the basis for an economy premised on equality and the interests of the majority.

As a recent IMF working paper points out, the production of test kits, co-ordinated by the state, can also be leveraged to improve manufacturing capacity, enhance technological know-how and create jobs for the future. Immediate efforts can translate into long-term gains.

If progressive social forces mobilise agreement on a common platform, the reopening of economic activity could be leveraged to realise a transformative vision of a new economy based on equality and the right to health, well-being, and economic democratisation.

This would require a collective effort to shift the strategic thinking informing the government’s immediate efforts to rapidly open the economy in an unmanaged way, and challenge the current programme of austerity. DM

Michael Nassen Smith, Research Associate, Institute for Economic Justice (IEJ). 

Neil Coleman, Co-Director, Institute for Economic Justice.