What the State does for the Poor III: The Expanded Public Works Programme: Part II - The Track Record

Elias Phaahla | May 21, 2015
This Brief serves as a continuation of a series which addresses the question; what is the State doing for the poor? It looks at the Expanded Public Works Programme by seeking to ascertain the track record of this State-led employment initiative.

The Extended Public Works Programme (EPWP) has now completed two 5 year phases in which it recorded remarkable successes in terms of providing poverty and income relief through temporary work to millions who are unemployed.  When the EPWP was first launched, it aimed at creating over 1 million job opportunities during Phase I of its running, which spanned from 2004 to 2009. As it turned out, 1.6 million temporary job opportunities were created in that period.
 
In Phase II of the programme, which lasted from 2009 to 2014, the Department of Public Works (DPW) set out to create 4.5 million job opportunities through the EPWP. Although only 4 069 640 jobs were created by the end of this phase, nevertheless, these figures are to be celebrated as they more than doubled the Phase I achievement. 
 
As a result of this achievement, the 2014 Labour Market Dynamics survey noted that “in 2014, seven out of ten of those who participated in the EPWP and other government job creation programmes were employed” [2]. These estimates were up from 56.9% in 2011. It was also found in the same survey that four out of every five participants who were employed secured a formal sector job.
 
The following section provides a sectoral overview of each of the 4 sectors that make up the EPWP: Infrastructure, Environment and Culture, the Social Sector, and the non-state sector. We should bear in mind that the Non-state sector was renamed the Economic sector during the implementation of Phase II of the EPWP.
 

Sectoral analysis of the EPWP

 
Minimum wages

An assessment of minimum wages in constant 2014 prices (‘real minimum wages’) paid out to EPWP participants from 2004 to 2011 as set out in the 2014 Quarterly Bulletin of the Reserve Bank of South Africa shows different   trends across the EPWP sectors.  
 
As shown in Figure 1, the value of real minimum wages paid by the Infrastructure sector were the highest during the 2011 financial year. The real value of minimum wages for 2011 was 20% higher than in 2004
 
a. Calculations are the author’s
b. Sources: EPWP, 4th Quarterly Report (2004 – 2011)
c. The first quarter for the EPWP financial year begins in April
 
The Environment and Culture sector trails behind Infrastructure in terms of the value of the real minimum wage by 20%. Like Infrastructure sector the value of real minimum wages has been seeing a steady increase since the EPWP’s launch. In this case, the value of the wages has increased by 35% in 2011. 
 
The wages for the Social sector, however, declined markedly between 2004 and 2011.  The real wages declined by 36% relative to 2004 wages. Of all the sectors of the EPWP, the Social sector is the one which paid the lowest minimum wage in 2011.
 
Real minimum wages in the Non-state sector have also fallen, dropping by 13% between 2004 and 2011.   Real minimum wages in the social and non-state sectors have behaved more erratically than those in the infrastructure and environment and culture sectors.
 
Work opportunities
 
The total number of work opportunities created through the EPWP in 2004 was 223 410. These figures rose significantly in 2011 as 843 459 work opportunities were created then through the EPWP. The changes in employment figures as a result of work opportunities created through the EPWP between 2004 and 2011 represent a 277% increase. 
 
Figure 2 shows that Infrastructure provided the most work opportunities in 2011 compared to other EPWP sectors. In terms of job creation, this sector accounts for 49% of work opportunities created by the Department of Public Works (DPW) through the EPWP.
 
a. Calculations are the author’s
b. Sources: EPWP, 4th Quarterly Report (2004 – 2011)
 
The Environment and Culture and the Social sectors follow behind Infrastructure by 21% in terms of the number of work opportunities created. Although trailing behind Infrastructure, these estimates represent a vast margin of 28%. 
 
Compared to all the other sectors of the EPWP, the Non-state sector produces the least number of jobs as only 9% of them come from this sector. 
 
The following section outlines the overall yearly budgetary expenditure for the wages paid to the participants across all sectors of the EPWP will be assessed. 
 
Wage expenditure
 
Aggregate real EPWP wages have grown dramatically between 2004 and 2011, roughly tripling between over the period.  However, the growth rate has fluctuated over the years, with drops between 2004 and 2005 and again between 2008 and 2009.
 
a. Source: EPWP, 4th Quarterly Report (2004 – 2011)
 

Conclusion

 
The Expanded Public Works Programme has become the government’s way of providing temporary employment for the unemployed.  The State has carried out this task most effectively, as the two phases of the EPWP have been a resounding success. Up to the end of 2011, more than five million work opportunities have been created. The target for the third five year phase is six million.
 
The size of the EPWP is determined by fiscal and institutional constraints, not by the number of people willing to work at the wages it offers.  The EPWP targets those most in need, by requiring work from them. 
 
EPWP wage expenditure should be seen as against a backdrop of social grants expenditure. In 2011, the State spent over R95 billion on social grants [3], compared with R4 billion for the EPWP is factored in.  It may well be that a reallocation of these income support resources towards the EPWP would lead to greater poverty reduction.  Simulations carried out on the General Household Survey would give an indication of what to do.
 
The State ought to be commended for successes recorded from the first two phases EPWP. The programme has entered its third phase, which will run from 2014/15 to 2018/19.  Constant and up-to-date monitoring and evaluation will remain imperative to ascertain how the programme fares in this period. 
 

Notes:

1. Stats SA, Labour Market Dynamics survey, 2014
2. Republic of South Africa, Budget Review, 2012, p. 86
 
Elias Phaahla
Researcher
elias@hsf.org.za