This presentation is part of the programme of the International Seminar "Social Protection, Entrepreneurship and Labour Market Activation: Evidence for Better Policies", organized by the International Policy Centre for Inclusive Growth (IPC-IG/UNDP) together with Canada’s International Development Research Centre (IDRC) and the Colombian Think Tank Fedesarrollo held on September 10-11 at the Ipea Auditorium in Brasilia.

1. Social protection and labour market
outcomes of youth in South Africa
Ingrid Woolard
SALDRU, University of Cape Town

2. Youth and adult employment ratios in South Africa
and selected emerging market economies
Source: ILO, 2010.

3. How do the unemployed support
themselves?
Type of support Unemployed youth Unemployed adults
Someone in the HH has
59% 47%
a job
Person receives a grant 14% 17%
Someone in the HH
receives a grant
45% 42%
Home agric production
(self)
5% 6%
Someone in the HH is
doing home agric
production
8% 8%
Quarterly Labour Force Survey, 2012:Q3

4. Social security in South Africa
Social insurance – Unemployment Insurance – is paid to
about 5% of the unemployed. It is a contributory scheme
and accounts for 0.2% of GDP
Social assistance – cash transfers – go to 16 million
individuals (about one-third of the population) each
month and accounts for 3.5% of GDP
Targeted at vulnerable groups: the major grant types are
the State Old Age Pension, the Disability Grant, the Child
Support Grant and the Foster Care Grant.

5. Labor supply responses to the
South African old-age pension
– Work less?
– Work more?
– Work elsewhere?

6. Mixed evidence
• Bertrand et al (2003) found evidence for a classic
disincentive effect associated with pension receipt
• Posel et al (2006)– highlight the importance of
looking at migrant labour
• Pension has impact on household composition
(Klasen and Woolard 2009, Edmonds et al 2005,
Ardington et al 2009)
• Ranchhod

7. Focus on youth –
Ardington, C.; Barnighausen, T.; Case, A.;
Menendez, A. (2013)
• Might anticipate different effects on younger and
older members for a number of reasons
– Younger adults may respond to the arrival of the
pension by investing more in their education
– Pensioners may prefer supporting their children
– Older prime-aged adults’ labour supply may be
less responsive to changes in household income
– Youth have higher levels of education

8. Gain versus loss of the pension
• Pension gain and pension loss may have asymmetric
effects on migration and that the effects may depend
on whether an individual is already a labour migrant
or not.

9. Pension Gain
For potential migrants, gain of the pension increases
the probability that the household meets the
financial constraint
For current migrants, gain of the pension is largely
irrelevant: they must have been meeting the
constraint prior to pension gain, and the pension
simply reinforces this

10. Pension Loss
• For potential migrants, loss of the pension reduces
the probability that the financial constraint is met
• For current migrants, loss may have a larger effect on
the probability of meeting the financial constraint for
individuals in lower status occupations and those
who have been migrants for shorter periods, who
may find it more difficult to be self-sustaining

11. Findings
• Relaxation of financial constraints can aid young men
in their search for jobs
• No perverse effects of the arrival of this stable source
of income into the rural household leading young
adults to choose to be ‘idle’ – neither studying nor
working.
• Benefit of additional household income appears to
help primarily those who have completed high
school

12. Need for unemployment benefits for
youth that have never worked?
• Some evidence that existing grants increase
job search
• Effect might be larger if unemployment
benefits went directly to the unemployed
person and were tied to sanctions, job
placement programmes and/or training
schemes

13. Thank you