TRALAC - Trade Law Centre

Swaziland: Economic Policies favour Elite according to Report

Wednesday, 03 November 2004

Source: IRIN News

Swazi government policies and trade schemes like the US African Growth and Opportunities Act (AGOA) have not dented poverty in the kingdom, as they primarily benefit the ruling family and an elite minority, according to a new report.

"Economic growth has been exceptional over the past years, and the country strives to attract more investors to reap the benefits of AGOA. Yet, all forms of inequality are substantially on the rise," concluded the report by Dr Gabriel Tati, a lecturer in the Department of Agricultural Economics and Management at the University of Swaziland.

The increasing prevalence of poverty was discernable in the widening gap between rural-urban development, escalating unemployment, a rapidly growing informal sector, and the rising number of female-headed households, Tati found.

About 39 percent of Swazi households are headed by women, and have an incidence of poverty 1.7 times that of households headed by men. The study blamed this disparity on the limited income earning opportunities for rural women, and the low incomes of women workers, which are an average 65 percent of the wages earned by men.

Income disparity finds the top 5 percent of the population controlling 26 percent of national income, while the bottom 40 percent controls only 11 percent.

Because wages are kept low to attract foreign investment, workers might find jobs, but still live in poverty.

"The poor female Swazis only get poorer after getting these jobs. With some of them still receiving salaries like US $49 per month (when they spend $25 for food and $12 for rent), poverty alleviation still remains an elusive goal," the study observed.

Most women working in the private sector are unskilled. An estimated 30 percent of wage labourers in Swaziland are women, mainly in unskilled and clerical jobs. Most of the 28,000 workers at the country's 35 garment factories are women.

"Female workers in the garment factories are exposed to life-threatening conditions, such as inhaling dust and drinking contaminated water, all forms of harassment, ranging from insults, threat of suspension or layoff, to sexual abuse from male supervisors, and no right to union membership ... To end strikes affecting the industry because of [poor] working conditions, the police have frequently used force to put an end to this type of strike," Tati noted.

Despite the presence of exporters, drawn to Swaziland because of AGOA, Tati cites growing doubts about what ordinary Swazis stand to gain under the trade scheme.

"Despite the impressive economic performance of the 1980s and early 1990s, the growth of formal employment has been dismal. The modern sector of the Swaziland economy has not created enough employment to be able to absorb all the job seekers in the economy," the report remarked.

The rate of job creation in the manufacturing sector was 9.3 percent in the period 1999/2000, at the start of the AGOA boom, but dropped to 0.4 percent growth by 2003. At the same time, the number of skilled workers decreased while the number of unskilled workers rose.

"In all the major sectors of the national economy, semi-skilled and unskilled workers are predominant. The incidence of unskilled workforce in Swaziland is related to the level of economic and human development ... For a country continuously aspiring to greater economic liberalisation and trade, an uncompetitive labour force may represent an obstacle for further economic growth and effective participation in the global economy," Tati cautioned.

One indicator suggests an underlying cause: government spending on education comprised 75 percent of GDP at independence in 1968, but had declined to 19 percent of GDP by 2003.

Meanwhile, government spending to meet the public service payroll, which the International Monetary Fund and other economists criticise as a costly and inefficient way to relieve unemployment, now takes the largest slice of the budget.

Poor education has hit younger Swazis hard, with 54 percent of the jobless under 25 years of age, and a further 29 percent aged between 25 and 34.

"Unemployment is pervasive in rural areas, suggesting a massive pool of job seekers trying to enter the labour market," the report commented.

But with manufacturing and agro-businesses investing in labour-saving machines rather than human capital, and government's huge deficit making more public sector employment impossible, no new job sources are in sight.

Swaziland is placed at 96 out of 173 countries in per capita income, according to the Human Development Report, but these benefits are enjoyed by the national leadership, local elites and multinational companies, resulting in the country's ranking of only 117 out of 173 nations in the Human Development Index.

"A large section of its population still faces poverty, evidenced by exploitative forms of labour use, unemployment and underemployment," Tati concluded.