MAXIMISING SOUTH AFRICA’S DEMOGRAPHIC DIVIDEND Ninth Meeting of the Working Group on Macroeconomic Aspects of Intergenerational Transfers, 3-8 June 2013, Barcelona
2005
80+$yrs 75"79$yrs 70"74$yrs 65"69$yrs 60"64$yrs 55"59$yrs 50"54$yrs 45"49$yrs 40"44$yrs 35"39$yrs 30"34$yrs 25"29$yrs 20"24$yrs 15"19$yrs 10"14$yrs 5"9$yrs 0"4$yrs
80+$yrs 75"79$yrs 70"74$yrs 65"69$yrs 60"64$yrs 55"59$yrs 50"54$yrs 45"49$yrs 40"44$yrs 35"39$yrs 30"34$yrs 25"29$yrs 20"24$yrs 15"19$yrs 10"14$yrs 5"9$yrs 0"4$yrs 6.0
5.0
4.0
3.0 2.0 1.0 0.0 1.0 2.0 3.0 Proportion$of$the$Population$(Percent) African$Male
4.0
5.0
6.0
6.0
5.0
4.0
African$Female
3.0 2.0 1.0 0.0 1.0 2.0 3.0 Proportion$of$the$Population$(Percent) Coloured$Male
80+$yrs 75"79$yrs 70"74$yrs 65"69$yrs 60"64$yrs 55"59$yrs 50"54$yrs 45"49$yrs 40"44$yrs 35"39$yrs 30"34$yrs 25"29$yrs 20"24$yrs 15"19$yrs 10"14$yrs 5"9$yrs 0"4$yrs
4.0
5.0
6.0
5.0
6.0
Coloured$Female
80+$yrs 75"79$yrs 70"74$yrs 65"69$yrs 60"64$yrs 55"59$yrs 50"54$yrs 45"49$yrs 40"44$yrs 35"39$yrs 30"34$yrs 25"29$yrs 20"24$yrs 15"19$yrs 10"14$yrs 5"9$yrs 0"4$yrs 6.0
5.0
4.0
3.0 2.0 1.0 0.0 1.0 2.0 3.0 Proportion$of$the$Population$(Percent) Asian$Male
4.0
Asian$Female
5.0
6.0
6.0
5.0
4.0
3.0 2.0 1.0 0.0 1.0 2.0 3.0 Proportion$of$the$Population$(Percent) White$Male
4.0
White$Female
DEMOGRAPHIC TRANSITION UNEVEN
1.2
Labour.Income Employment SelfGEmployment
Labour.Income,.Normalised
1.0 0.8 0.6 0.4 0.2 0.0 0
10
20
30
40
50
60
70
80
90+
Age
SOUTH AFRICA’S LIFECYCLE DEFICIT
1.2
Consumption,2Normalised
1.0 0.8 0.6 0.4 0.2 0.0 0
10
20
30
40
50
60
70
80
90+
Age
SOUTH AFRICA’S LIFECYCLE DEFICIT
Normalised3(YL3for330!493year3olds)
1.2
Lifecycle3Deficit Labour3Income Consumption
1.0 0.8 0.6 0.4 0.2 0.0 !0.2 !0.4 0
10
20
30
40
50
60
70
80
90+
Age
SOUTH AFRICA’S LIFECYCLE DEFICIT
LFPR9(Expanded)
0.90 0.80 0.70 Proportion
0.60 0.50 0.40 0.30 0.20 0.10 0.00 15
20
25
30
35
40
45
50
55
60
65
Age
So, late rise in labour income profile, sharp decline, relatively small YLS
0.90
Unemployment:Rate Non>Searching:Unemployed:::Labour:Force
0.80 0.70
Proportion
0.60 0.50 0.40 0.30 0.20 0.10 0.00 15
20
25
30
35
40
45
50
55
60
65
Age
So, late rise in labour income profile, sharp decline, relatively small YLS
0.80
Unemployment4Rate
0.70 0.60 0.50 0.40 0.30
15F24 25F34 35F44 45F54 55F65
15F24 25F34 35F44 45F54 55F65
15F24 25F34 35F44 45F54 55F65
15F24 25F34 35F44 45F54 55F65
15F24 25F34 35F44 45F54 55F65
0.10 0.05 0.00
15F24 25F34 35F44 45F54 55F65
0.20
No4Education
Primary4Only
Some4Secondary
Secondary
Diploma/Certificate
Tertiary
So, late rise in labour income profile, sharp decline, relatively small YLS
0.90
Informal;Sector;:;Total;Employment
0.80 0.70
Proportion
0.60 0.50 0.40 0.30 0.20 0.10 0.00 15
20
25
30
35
40
45
50
55
60
65
Age
So, late rise in labour income profile, sharp decline, relatively small YLS
1.0
LFPR:(Expanded) OAP:Access
Proportion
0.8
0.6
0.4
0.2
0.0 0
10
20
30
40
50
60
70
80
90+
Age
So, late rise in labour income profile, sharp decline, relatively small YLS
1.00
Low6Fertility Medium6Fertility High6Fertility
0.75
Percent
0.50
0.25
0.00
!0.25
!0.50 1950
1960
1970
1980
1990
2000
2010
2020
2030
2040
2050
2060
SOUTH AFRICA’S DEMOGRAPHIC DIVIDEND
SOUTH AFRICA’S DEMOGRAPHIC DIVIDEND • Under
all three assumptions, SA has positive first dividend until mid-2040s
• Weak
demand for labour compromises both the first and the second dividend • High
unemployment depresses labour income profile, particularly for youth; long-term unemployment; and wage scarring
Labour3Income,3Normalised
1.1
1995
1.0
2005
0.9
Change
0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0.0 !0.1 !0.2 0
10
20
30
40
50
60
70
80
90+
Age
LABOUR INCOME: 1995-2005
Normalised2(YL2for230!492year2olds)
1.00 0.75 0.50 0.25 0.00 !0.25 !0.50 !0.75 !1.00 0
10
20
30
40
50
60
70
Age2(Years) Private2Transfers
Public2Transfers
TRANSFERS
Net2Transfers
80
90
Normalised2(YL2for230!492year2olds)
1.00 0.75 0.50 0.25 0.00 !0.25 !0.50 !0.75 !1.00 0
10
20
30
40
50
60
70
80
Age2(Years) Inter!household2Transfers
Intra!household2Transfers
Net2Private2Transfers
PRIVATE TRANSFERS
90
Normalised2(YL2for230!492year2olds)
1.00 0.75 0.50 0.25 0.00 !0.25 !0.50 !0.75 !1.00 0
10
20
30
40
50
60
70
80
90
Age2(Years) Intra!household2Outflows
Intra!household2Inflows
Net2Intra!household2Transfers
INTRA-HOUSEHOLD TRANSFERS
Normalised2(YL2for230!492year2olds)
1.00 0.75 0.50 0.25 0.00 !0.25 !0.50 !0.75 !1.00 0
10
20
30
40
50
60
70
80
90
Age2(Years) Inter!household2Outflows
Inter!household2Inflows
Net2Inter!household2Transfers
INTER-HOUSEHOLD TRANSFERS
Normalised2(YL2for230!492year2olds)
0.100 0.075 0.050 0.025 0.000 !0.025 !0.050 !0.075 !0.100 0
10
20
30
40
50
60
70
80
90
Age2(Years) Inter!household2Outflows
Inter!household2Inflows
Net2Inter!household2Transfers
INTER-HOUSEHOLD TRANSFERS
Normalised2(YL2for230!492year2olds)
1.00 0.75 0.50 0.25 0.00 !0.25 !0.50 !0.75 !1.00 0
10
20
30
40
50
60
70
80
Age2(Years) Inflows2(TGI)
Outflows2(TGO)
Net2Public2Transfers2(TG)
PUBLIC TRANSFERS
90
Normalised2(YL2for2307492year2olds)
0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0.00 0
10
20
30
40
Age
50
60
UIF/WCF
Family2Allowances
Disability2Grant
Education
Health
Other
70
80
90
OA2Pension
PUBLIC TRANSFER INFLOWS
Normalised2(YL2for230!492year2olds)
1.00 0.75 0.50 0.25 0.00 !0.25 !0.50 !0.75 !1.00 0
10
20
30
40
50
60
70
80
90
Age2(Years) Asset!based2Reallocations
Saving
Asset2Income
ASSET-BASED REALLOCATIONS
Normalised2(YL2for230!492year2olds)
1.00 0.75 0.50 0.25 0.00 !0.25 !0.50 !0.75 !1.00 0
10
20
30
40
50
60
70
80
90
Age2(Years) Asset!based2Reallocations
Private2ABR
Public2ABR
ASSET-BASED REALLOCATIONS
Normalised2(YL2for230!492year2olds)
1.00 0.75 0.50 0.25 0.00 !0.25 !0.50 !0.75 !1.00 0
10
20
30
40
50
60
70
Age2(Years) Private2ABR
Private2Saving
Private2Asset2Income
PRIVATE ABR
80
90
Normalised2(YL2for230!492year2olds)
1.00 0.75 0.50 0.25 0.00 !0.25 !0.50 !0.75 !1.00 0
10
20
30
40
50
60
70
Age2(Years) Public2ABR
Public2Saving
PUBLIC ABR
Public2Asset2Income
80
90
Normalised2(YL2for230!492year2olds)
1.00 0.75 0.50 0.25 0.00 !0.25 !0.50 !0.75 !1.00 0
10
20
30
40
50
60
70
80
Age2(Years) Lifecycle2Deficit
Transfers
Asset!based2Reallocations
FINANCING THE DEFICIT
90
Share1of1Consumption1(Percent)
200.0 150.0
33
100.0
7 53
50.0 47 0.0
54
0 &0
61 29 3
63
97
12 26 1
134
127
113
124
62
70
51 &25
&34
&37
&54
&50
40&491yrs
50&591yrs
&34
&50.0
31 0
&17
43 &21
&2
70+1yrs
Total
&31
&100.0 0&141yrs
15&191yrs
20&291yrs YL
30&391yrs
TG
TF
60&691yrs RA
FINANCING CONSUMPTION
POLICY IMPLICATIONS •
National Development Plan 2030 •
Elimination of poverty, reduction in inequality as key objectives
•
Specifically notes the role of the demographic dividend
•
“Youth lens”
RELEVANT NDP OBJECTIVES •
ECD to be a top priority
•
All children to have at least 2 years’ preschool education
•
Improved throughput in secondary education
•
Expansion of college system and a 25% participation rate
•
Produce 30 000 artisans per year by 2030
Public employment programmes to reach 1 million people by 2015 and 2 million people by 2030
•
Increase university enrollments by 70% to 1.62 million
•
Bottom 40%’s share of national income to rise from 6% to 10%
•
Increase number of students in maths and science based degrees to 450 000
•
Broaden ownership of assets to historically disadvantaged groups
•
Raise life expectancy at birth to 70 years
•
Improve TB prevention and cure; reduce maternal, infant and child mortality; halve rates of injury, accidents and violence
•
Ensure progressively that no-one lives below a defined minimum social floor
•
Income support to the unemployed through various active labour market initiatives
•
• • • •
•
The unemployment rate to fall from 25% in 2012, to 14% (2020) and 6% (2030)
t e k r a M r
Employment rate to rise from 41% to 61%
Rural employment rate to rise from 29% to 40% LFPR to rise from 54% to 65%
u o b a L
Savings rate to rise from 16% of GDP to 25%
s t e
•
Gross fixed capital formation to rise from 17% to 30% of GDP
•
GDP growth of 5.4% p.a.
•
All working individuals should make adequate provision for retirement through mandated savings
A
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n o i t a c u
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