Not for the first time, a trade union recently said the next president of the African National Congress (ANC) had to be ‘pro-poor’. The implication is that President Thabo Mbeki’s government has been bad for the poor. But what does the record show?

The proportion of people living in poverty is higher now than when Mbeki took office in 1999. But, as this column pointed out two weeks ago, the incidence of poverty has dropped in the last two years. Partly this is because unemployment, though also higher than when Mbeki took office, has dropped. Another reason for the decline in poverty is the extension of the social security system. This will be as much part of Mbeki’s legacy as anything else.

The figures are impressive. The number of beneficiaries of social security payments has risen in the last six years from 3.5 million to 12 million, which is about a quarter of the population. Two thirds of the beneficiaries receive the child support grant, whose extension beyond the present cut-off age of 14 is under consideration.

Last year Mbeki said in his state-of-the-nation address that real social expenditure per person had increased by 60% between 1983 and 2003. Finance Minister Trevor Manuel noted in his budget speech a fortnight later that annual public spending per person on community and household services and income transfers had risen from R2000 in 1995 to R4800 in 2005.

Scrutiny of the budget reveals equally impressive figures. Social security and welfare consumed 9.8% of it in 1997/98, a proportion which has risen to 16% this year. Even more impressive has been the decline over the same period in the slice of the budget devoted to paying off the government’s interest bill – from 20.4% to 9.5%.

Manuel was accordingly able to declare in his 2007 budget speech that ‘the savings on interest that we have seen since 2001 provides an additional R33 billion a year to spend on services and infrastructure, money that we would not have had if we had kept borrowing at the level it was in 1994.’ This implies a partial redistribution of government spending from banks and bondholders to pensioners and children in poor households and disabled people. It would not have been possible had the government heeded demands from unionists and others to run up a larger budget deficit in order to be ‘pro-poor’.

Whether a major extension of welfare payments is the best way to tackle poverty is another question. The government has rejected as unaffordable the basic income grant proposed by the Democratic Alliance and others. There must nevertheless be a risk that even the current social security bill will become a heavy burden on the fiscus should the economy suffer a downturn. That could take us back to the bad old days of financing current spending by borrowing.

The cost of social security aside, there is also a philosophical question. As Manuel put it two years ago, ‘Is our vision of a future South Africa one in which over 20% of the population depends on welfare for a livelihood?’ The answer, unfortunately, seems to be yes.

To the extent that it has inhibited a timid government from implementing the labour market reforms needed to speed up job creation, the trade union movement has in fact been ‘anti-poor’. In practice, union demands for pro-poor policies often mean pro-union policies. These are not necessarily the same thing, since unions by nature seek to protect their members’ jobs against competition from unemployed people willing to work for lower wages. These are usually the poorest of the poor.

The unions are bitterly opposed to what they call the ‘casualisation of labour’. The proportion of workers in permanent employment has dropped from 77% to 71% over the last few years as casualisation, temping, outsourcing, and fixed-term contracting have grown more rapidly than has permanent employment. The reasons for the changing mix of the terms of employment are varied. But among them is almost certainly a desire on the part of employers to circumvent the labour legislation whose liberalisation organised labour opposes. If the trade union movement succeeds in putting a stop to casualisation, the likelihood is not that casuals will get permanent jobs but that a point of entry to the labour market for poor and unskilled jobseekers will be blocked.

Here too, pro-poor policy means doing what the unions oppose, not what they advocate.