Employment guarantee or minimum income? Workfare and welfare in developing countries

In many parts of the 'South - i.e. the 'developing' countries of the world - widespread poverty is linked to landlessness and unemployment. Two possible responses to such poverty are employment guarantee (or public works) programmes and cash transfers. In general, low-wage job creation is the preferred option of both elites and citizens, but in South Africa cash transfers through a minimum income programme might, perversely, be more viable politically and effective more broadly in terms of poverty alleviation. This paper examines the dilemmas and choices facing South Africa, which experiences unusual levels of both deagrarianisation and unemployment. The relative viability and efficacy of employment guarantees and cash transfers depends primarily on prevailing wages in the 'market'. In a high-wage economy such as South Africa, the political power of organized labour is generally sufficient to prevent low-wage employment creation in public works programmes. In the South African context - in contrast to low-wage settings such as India or Ethiopia - the extension of public welfare might be more viable than an employment guarantee, although the political obstacles should not be under- estimated.