Socio-economic impact of privatisation in South Africa : social work perspective

Abstract

The purpose of the study was to identify the socio-economic impact that privatization would have on South Africans and especially on disadvantaged groups. It should be noted that privatization, which is an integral part of an extensive public sector reform policy, occupies a central position in government efforts of the development of the private sector. The objectives of privatization are based on the needs and capacity of individual countries, and each country is expected to have its own privatization objectives, depending on its level of development are: improving efficiency; enhancing freedom of consumer choice; fostering competition; reducing budget deficit and public debts; and further extending private share ownership. Since the inception and the implementation of the concept in South Africa, there had been a considerable number of negative and positive critiques. Such critiques are mainly based on the social impact of privatization, and that is where the concept of social development and social welfare is applied in a quest of seeking solutions to social impacts of privatization. The White Paper on Social Welfare describes social welfare as an intrinsically linked system to other social systems through which people's needs are met. Social welfare is a mechanism to be used in the achievement of social development. Social work as a profession is

in this instance a major role player within the social welfare system. Hence its involvement in the process of ensuring on ushering a better life for all, through the enhancement of the societal and personal well-functioning. The question of privatisation and its negative impacts on the society makes social workers functions to be wider in addressing social problems. Therefore the study sought to clearly define the role that can be played by social work within the process of privatisation in pursuit of reducing the ever increasing social pathologies. The study was further induced by the fact that privatization affects our social landscape in that it brings in place illiteracy, unemployment, poverty, retrenchments of the unskilled labourers and other related social pathological problems. Data gathering was conducted by means of literature study and personally administered questionnaires. The questionnaires were aimed to understand the socio-economic impacts of privatization in South Africa as an emerging economy, to suggest possible interventionist strategies to avert and address the widening socio-economic impacts of privatization and to delineate a role for social development within the process of privatization in general and in averting the anticipated social pathological problems associated with the process in particular. The findings of the study revealed that privatization is beneficial to economic growth and development, whereby it improves the investment grade rating of

South Africa by international credit rating agencies. Privatization further tend to boost the enterprises in the sense that they enjoy access to capital and better able to benefit from the transfer of foreign skills. Privatized companies also facilitate a greater spread of share ownership amongst public in a wider distribution of wealth. The study further reflects that privatization allows for an accelerated reduction in the level of state debt which has significant impact on the interest costs of government. On the other hand the study indicates that privatization affects the country's social landscape on numerous ways. It indicates that privatization involves employment losses, high rate of unemployment and perpetuates the vicious cycle of poverty. The study further indicates that private sector cannot meet the needs of the poor, thereby denying the majority poor access to basic services and infrastructure. The following problems had been identified as problems that are associated with privatization: retrenchment of unskilled labourer, casualisation of labourers, disintergration of families due to restructuring and Poor service delivery by the private sector.