Social Security Law Assignment: Shortfalls and Recommendations

This essay critically analyzes the South African social security system, examining its origins in the Constitution and its current shortcomings. It delves into the shortfalls in social assistance, highlighting the exclusionary aspects and inadequate benefits, and explores the concept of a Basic Income Grant (BIG) as a potential solution. The essay outlines the advantages and disadvantages of a BIG, considering its impact on poverty reduction, administrative efficiency, and economic activity. Furthermore, it addresses shortfalls in compensation for occupational injuries and diseases, the Road Accident Fund, and the pension fund system, emphasizing the exclusion of informal sector workers and the limitations of existing schemes. The essay concludes by advocating for amendments to the social security system to ensure universal access and align social assistance with income tax rebates, along with mandatory employer enrollment in retirement funds, promoting financial protection for all citizens.

Social Security Law
Assignment: 1
Due Date: 21st September 2021
Dale Onions
201802354

Contents Page:
1. Introduction…………………………………………………………………………Page: 1
2. Shortfalls in Social Assistance……………………………………………………...Page: 1
3. Social Assistance and the Basic Income Grant……………………………………..Page: 2
3.1 Advantages………………………………………………………………….Page: 3
3.2 Disadvantages………………………………………………………………Page: 3
4. Shortfalls in the provision for Compensation for Occupation Injuries and Diseases, Road
Accident Fund, the Pension Fund system…………………….…………………….Page: 4
5. Conclusion………………….………………………………………………………Page: 5
6. Bibliography……………….……………………………………………………….Page: 6

1. Introduction:
The goal of social security is to provide protection for members of society in the event of
economic or social misfortune.1 It is critical to remember that South Africa's current social
security system has its origins in Section 27 of the Constitution of the Republic of South Africa,
19962, which acknowledges social security as one of the Bill of Rights' essential rights. Section
27 provides everyone the right to social security, including appropriate social assistance if they
are unable to maintain themselves and their dependents3. “The protection that society provides
for its members, through a series of public measures, against the economic and social distress
that would otherwise be caused by the stoppage or substantial reduction of earnings resulting
from sickness, maternity, employment injury, unemployment, invalidity, old age, and death,4”
according to the International Labour Organization (ILO).
2. Shortfalls in Social Assistance:
For a middle-income developing country, South Africa inherited a social security system that is
extremely extensive. A closer examination of the system, however, reveals that it has numerous
flaws. The system's exclusionary aspect is particularly noteworthy5.
The social assistance system has a categorical approach, which means that only particular types
of disadvantaged people are targeted for social assistance protection, such as the elderly,
children, and disabled people. The benefits offered by various grants are still inadequate, and the
handouts are insufficient to solve the country's significant poverty. The typical hazards identified
by the International Labour Organization (ILO) are addressed by social insurance. As a result,
the system is stated to take a risk-based strategy. For a developing country like South Africa,
where other risks such as HIV/AIDS also pose a threat to people's social security, and where
there is a significant difference between typical social security risks in rural and urban areas, the
risk-based approach is too limited6. Several groups of persons are excluded from social security
1 Strydom Essential Social Security Law 2 ed (2001) 3
2 Section 27 of the Constitution of the Republic of South Africa, 1996
3 Section 27 of the Constitution of the Republic of South Africa, 1996
4 Oliver Introduction to Social Security 3 ed (1984) 3
5 Strydom Essential Social Security Law 2 ed (2001) 7
6 Strydom Essential Social Security Law 2 ed (2001) 20
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coverage, owing to the system's restrictive approach, which only covers those who qualify as
"employees".
The traditional, limited concept of social security, based on employment-based social insurance
and categorical and means-tested social assistance, is unsuitable for the South African
environment. This is true considering the following factors: the widespread poverty to which
most people are exposed; the current exclusion of many people from the system; the rise in
informal employment and the exclusion of informally employed people; constitutional
guarantees that everyone will have access to social security; and so on. South Africa’s social
security system is mainly compensation focused and little attention is given to the aims of
prevention and integration.7
3. Social Assistance and Basic Income Grants:
Social assistance is a government-provided basic minimum safety net that tries to alleviate
poverty which is governed by the Social Assistance Act8. This is in accordance with the
Constitution's commitment that people who are "unable" to maintain themselves and their
dependents would be provided with adequate social assistance9. It's worth noting the state's
obligations in this section, stating that the state must adopt reasonable legislative and other steps,
within its available resources, to promote progressive realization of the right.10
A Basic Income Grant is an entitlement that is not subject to a means test. According to the
grant, it will increase economic support without depleting psychological resources11. A social
policy alternative, the Basic Income Award is characterized as a general social assistance grant
for all South Africans. The Basic Income Grant, also known as the "solidarity grant" or "citizens
stipend," is a monthly payment made to every citizen and legal resident who has lived in the
country for at least one year. “It is paid to every individual as a right, it is not based on the
household unit, and paid regardless of marital status, family status, race, gender, and work
status.” The Basic Income Grant would be R100 given every month to every individual
unconditionally. This is the amount was the one originally proposed in the Taylor Report. Today,
7 Strydom Essential Social Security Law 2 ed (2001) 23
8 The Social Assistance Act 59 of 1992
9 Section 27 (1) c of the Constitution of the Republic of South Africa, 1996
10 Section 27 (2) of the Constitution of the Republic of South Africa, 1996
11 Taylor Committee Consolidated Report Transforming the past Protecting the future
(2002) 61.
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the grant would have to be inflation indexed and reference would have to be made to the Food
Poverty Line. The grant would have to increase yearly to account inflation.12
3.1 Advantages:
The BIG is not based on financial need; it is a right granted to all legal citizens and residents.
Every member of the household, even those who are now excluded who are between the ages of
18 and 59, will receive their own award. The BIG would reduce poverty by 74% and eliminate
most underprivileged people who are unable to access social assistance because this grant would
cover them.13
Unlike means-tested payments, the award would be universal and distributed to everyone as a
right. This eliminates the need to hire staff to investigate the applications. There would be no
room for administrative abuse or corruption because the money would flow directly to the
recipients.14
Families would be able to purchase the things they require while still having the ability to save.
Many people will be able to start little businesses with the BIG, such as selling fruits and
vegetables. This would have a positive impact on the local economy. This would be especially
beneficial to rural communities and townships. More consumption would lead to increased
economic activity, which would benefit the entire economy.15
3.2 Disadvantages:
There is the belief that giving unemployed individuals, who are of working age, a grant creates a
state of dependency, and that people would rather get “hand-outs” instead of working.16
Some important stakeholders, such as the then-Minister of Finance, who told parliament that the
Basic Income Grant would cost R60 billion, are passionately opposed and dispute its
affordability.
12 Taylor Committee Consolidated Report Transforming the past Protecting the future
(2002) 61.
13 BIG Financing Reference Group Breaking the Poverty Tap (2004) 26
14 BIG Financing Reference Group Breaking the Poverty Tap (2004) 26-27
15 BIG Financing Reference Group Breaking the Poverty Tap (2004) 28
16 BIG Financing Reference Group Breaking the Poverty Tap (2004) 31.
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Women and men without children, between the ages of 19 and 59, who do not have a disability,
who have never been formally employed are unfairly excluded from the current social security
system. By introducing the BIG, we would be realizing a constitutionally entrenched right, while
also facilitating job creation the BIG would promote self-employment and the starting of small
businesses which would improve the economy in rural and township areas where there is very
little economic activity.
4. Shortfalls in the provision for Compensation for Occupation Injuries and Diseases, Road
Accident Fund, the Pension Fund system:
Employees who catch diseases or experience injuries at work are protected by the Compensation
for Occupational Injuries and Diseases Act 17(COIDA). COIDA's goal is to compensate
employees who are disabled or die because of a work-related injury or sickness while on the job.
People in the informal sector and domestic workers who suffer occupational injuries and/or
diseases are excluded from receiving any type of social assistance18. For financial assistance or
support, they must rely on other means or their family. Because they labour under less tight
supervision and often in more risky and desperate settings, workers in the informal sector are at a
higher risk of occupational accidents and diseases than those in the official sector. As a result,
individuals who need greater protection, unfortunately, have less protection in terms of the
formal social security system. Government employees are not covered by COIDA19.
The Road Accident Fund Act 56 of 1996, governs the protection of people against motor vehicle
accidents (RAF)20. The Fund's principal goal is to compensate people who have been unfairly
injured or killed because of driving a car. Whether the identity of the owner or the driver, or
both, has been verified, the Fund will pay compensation for claims deriving from loss or damage
caused by the driving of a motor vehicle. A fixed fuel levy is used to fund it21. The obligation to
pay only arises if the loss, or injury or death is due to the negligence or wrongful act of the driver
or of the owner of the motor vehicle or of his or her employee in the performance of the
employee’s duties as employee22. The flaw that can be emphasized is that this fund will only pay
17 Compensation for Occupational Injuries and Diseases Act 130 of 1993
18 Compensation for Occupational Injuries and Diseases Act 130 of 1993
19 Compensation for Occupational Injuries and Diseases Act 130 of 1993
20 The Road Accident Fund Act 56 of 1996
21 The Road Accident Fund Act 56 of 1996
22 The Road Accident Fund Act 56 of 1996
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injuries that were caused by another person's negligence or wrongful act. This means that if
someone is injured or killed in an accident that was not negligent or wrongful, the RAF will not
recompense the person who has been injured or the family if the person has died.
Occupational retirement schemes/funds are a type of social insurance that protects employees
and their dependents from losing income or support when they retire.23 In most cases, an
employer will set up a retirement plan in the form of a pension fund or a provident fund. 24The
rules of a retirement fund establish the benefits that are payable as a result of membership. This
fund only supports individuals in the formal sector, not those in the informal sector, which is a
significant gap because those in the informal sector are the ones who need it the most. A pension
is also a contributory fund, which means that in order to get benefits, an individual must first
make a contribution25. The disadvantage is that some people may be unaware that they must
contribute to obtain a pension fund. We would need to implement automatic enrolment to
encourage workers above the tax threshold to contribute to supplementary retirement and
insurance arrangements as well as a low-cost retirement savings arrangement for supplementary
contributions that would also cater for low-income workers and the self-employed
5. Conclusion / Recommendation:
The present social security system in South Africa has the correct vision and idea, however it
falls short of its Constitutional requirements by exclusion of certain individuals. In accordance
with the S v Grootboom26 case the state is under constitutional obligation to provide access to
adequate social security. The social security system must be amended to benefit to the best of its
ability every individual and not just a portion. The means tests for social grants should be phased
out through alignment of social assistance with the structure of personal income tax rebates. As
well as employers must enroll employees in a retirement fund unless an choice to opt out is
given.
6. Bibliography:
23 Strydom Essential Social Security Law 2 ed (2001) 36
24 Strydom Essential Social Security Law 2 ed (2001) 36
25 Strydom Essential Social Security Law 2 ed (2001) 35
26 Government of the Republic of South Africa v Grootboom (CCT11/00) [2000] ZACC 19; 2001 (1) SA 46; 2000 (11)
BCLR 1169 (4 October 2000)
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-Books:
Strydom Essential Social Security Law 2 ed (2001)
Oliver Introduction to Social Security 3 ed (1984)
Taylor Committee Consolidated Report “Transforming the past- Protecting the future” (2002)
61.
BIG Financing Reference Group Breaking the Poverty Tap (2004)
-Legislation:
The Constitution of the Republic of South Africa, 1996
The Social Assistance Act 59 of 1992
Compensation for Occupational Injuries and Diseases Act 130 of 1993
The Road Accident Fund Act 56 of 1996
-Case Law:
Government of the Republic of South Africa v Grootboom (CCT11/00) [2000] ZACC 19; 2001
(1) SA 46; 2000 (11) BCLR 1169 (4 October 2000)
-Internet Sources:
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