Browsing by Author "Donaldson, Andrew"

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    South Africa's debt sustainability: A multi-factor approach
    (2022) Begbie, Lyle; Donaldson, Andrew
    An increasing debt-GDP ratio, slow growth, high debt costs and declining credit ratings call into question the sustainability of South Africa's public debt. However, some commentators have drawn on Modern Monetary Theory in arguing that increasing debt can be tolerated for states that have a level of monetary sovereignty. This paper concludes that South Africa has a high degree of monetary sovereignty due to factors including its flexible exchange rate, independent and credible central bank, high level of financial development and private wealth and limited liquidity risk. However, the scope for increasing debt is not unlimited, the risks associated with rising inflation cannot be ignored and the national treasury's fiscal consolidation plan should not be abandoned. South Africa's comparatively strong financial institutions and persistently low global real interest rates allow the fiscal consolidation programme to be implemented gradually without undue disruption to the growth recovery, while avoiding the risk of a debt crisis, hyperinflation, and a sovereign default.
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    Take cover: Incentivising wider social insurance participation in South Africa
    (2021) Borros, Georgina; Donaldson, Andrew
    This paper examines the gap in social insurance coverage in semi-formal enterprises, and explores options for incentivising participation by lower income workers in a comprehensive statutory social security scheme. A probit model is used to quantify current patterns of UIF and pension coverage. The analysis confirms that business owners, employees in the informal sector and those without an employment contract are significantly less likely to participate. A transition matrix is used to assess the trends in participation over the 2020 lockdown period - showing a statistically significant increase in pension fund and UIF participation, which suggests that the Covid-19 TERS benefit generated an availability heuristic effect. Two subsidy models are examined, designed to incentivise wider participation: the first being a subsidy for comprehensive social insurance cover (including pension and unemployment insurance) and the second a subsidisation of unemployment insurance only. Both subsidy models are costed. In the event of full participation, the unemployment insurance subsidy would cost the state R16 billion annually, while a comprehensive social insurance subsidy would amount to R48 billion annually. The unemployment insurance subsidy is advised as an immediate avenue for action, while the comprehensive plan remains a goal for higher welfare in the long run.
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    Teacher Remuneration in South Africa: Incentivizing Performance
    (2021) Horn, Aidan; Donaldson, Andrew; Leibbrandt, Murray
    Despite high government expenditure, education in South Africa is poor quality. We focus on how teacher quality can be improved by improving the structure of their remuneration. Performance-related pay, which can be based either on measuring learner test scores, or by measuring teacher content knowledge or pedagogical skills, has sometimes been successful in countries with low levels of teacher effort, and may be applicable in South Africa. However, measures to enhance accountability or reward performance need to take into account resistance by teacher unions. We situate the discussion in the context of South Africa's existing framework for teacher remuneration under the Occupation Specific Dispensation. From this, we criticize the relatively flat progression of salaries as teachers' experience increases, which discourages skilled teachers from remaining in the profession. We propose that performance-based pay be integrated into the existing salary structure through bonus salary notch progressions, thereby also increasing the slope of salary progression.