What do we mean by 'well-being'?

Phiri. Mapetla. Zola. Mdeni. These words, written boldly in white on a black background, list some of Soweto’s neighbourhoods. They’re printed on a sweater that’s draped over a wooden hanger at the back of a multipurpose streetwear store at 173 Machaba Drive in Mofolo Village, Soweto. Co-owners Wandile Zondo and Galebowe Mahlatsi say the reference is an ode to Tokollo Tshabalala, who first strung those words together in a kwaito song more than 15 years ago.

It’s also a recognition that the store – a melting pot of vibrant and youthful energy focused, in Wandile’s words, ‘on changing the face of the township’ – could convey shared and common experiences of the past and the present. The clothes and the subculture they represent could also be a conduit to an array of activities focused on well-being, a sense of community, and social ties based on collaboration and trust. Taking the community along a journey towards a new idea of their surroundings was key to giving the township, a ‘new face’ as Galebowe puts it: ‘Take running culture. We’re not the first ones to do it. But, in terms of pioneering and bringing it together with street culture in the township … we are the first ones to do that.’ Back in 2005, some would’ve suggested this was some idealistic concept that wouldn’t last beyond a few years. Yet, the store’s success is testimony to the fact that people in and outside Soweto yearn for personal interactions as much as they do for consumption and the accumulation of money and wealth.

One of Soweto’s homegrown success stories with a keen interest in developing social ties based on trust and collaboration is President Cyril Ramaphosa. From his clarion call, citing Hugh Masekela’s song, Thuma Mina, to his early-morning walks in Soweto, Langa, New Brighton and the Grand Parade, Ramaphosa has inspired a new wave of optimism with his call to everyone to lend a hand.

The optimism is a recognition that, after more than two decades of democracy, it takes more than any one stakeholder grouping or political party to build a society than shared identity cards, a national flag and a national anthem. It is also a recognition that much like 173 Machaba Drive in Soweto, well-being is an economy of social ties.

Defining a well-being economy

This year’s Benefits Barometer focuses on how well-being can be attained and the role of each stakeholder grouping in that effort. We explore the notion of well-being in its multiple dimensions and at various levels – individual, community, workplace, corporate and the broader economy – with an understanding that well-being is not only about individual self-interest, driven by materialism; it is more fundamentally about shared interests built on interpersonal collaboration, healthy ecosystems and strong social ties.¹ A ‘well-being economy’, therefore, is one in which collective and individual well-being is influenced by cohesive social relations and social institutions. Viewed in this way, well-being becomes a virtuous outcome of the collaboration of multiple stakeholders.

Social mobility is an important facilitator of well-being and it is both enabled and limited by how ecosystems, forms of social solidarity and social contracts are organised and designed. At an individual level, as we see with Wandile and Galebowe, recognition of one’s passions and goals is as important as making a living without being incessantly vulnerable to poverty. At community level, collective well-being involves the individual’s voluntary engagement in multistakeholder activities that establish inclusive, collaborative and empowering responses to local needs. Individual and collective well-being and the well-being economy, according to University of Pretoria economist Lorenzo Fioramonti can exist only through ties of solidarity, trust and common interest rather than transactional relationships: ‘ […] this type of trust is not built through mass production and consumption. It is built every single day by the many associations, committees, sports clubs and recreational initiatives that the growth economy relegates to insignificance’.²

The role of organisations

If President Cyril Ramaphosa’s Thuma Mina initiative is a call to action, what action can corporate South Africa take to be part of the change required in South Africa to generate shared prosperity and social inclusion? At one level, the workplace, where those who are employed spend most of their time, offers a critical meeting place for galvanising the South African imagination – for exchanging ideas, for crossing divides, for creating social cohesion. One way this can be achieved is by having early childhood development facilities on site for the children of all employees, from the cleaner to the chief executive officer. This would foster early voluntary interactions across barriers of class and culture, contributing to greater social cohesion.

At another level, workplace organisations have a role to play not just as places of interaction between employees but also as producers of goods and services – a reality that ties them with other stakeholder groups, such as suppliers, customers and regulators.

The combination of the workplace as a meeting place and producer of goods and services should mean the pursuit of the goal of being a ‘well-being employer’. This is a notion we discuss at length in other parts of the publication. In effect, it means employers and employees cohering for mutually beneficial outcomes that positively impact on employment and the company’s bottom line. It’s safe to say that it is a goal which enjoins corporations to pursue well-being in multiple ways. These could include prioritising employees’ physical and mental health through preventative stress management approaches, or responding to their financial vulnerability by facilitating access to financial products that meet specific needs.

Externally, workplace organisations have a role to play in responding to the socio-economic challenges of a country like South Africa, vastly unequal and divided. Here, their role is informed by an understanding that they, too, can play an important part in transforming society through supporting small business, channelling investments to underserved economic corridors and second-tier cities, and ensuring their workplaces strategically pursue diversity and transformation. These actions ought not to be seen as a response to the need for regulatory compliance. They ought to emerge from embracing a new mindset and paradigm that broadly advances a model of integrated strategic planning around issues of skills development, diversity and inclusion, transformation, gender equality, enterprise development, social cohesion, and social mobility and protection. Resolving them will surely positively impact on the corporate and social bottom line.

Case study/lesson

The way we measure well-being influences the set of trade-offs, priorities and opportunities to which we dedicate energy, attention and interest. If we understand well-being to narrowly involve expanding the production of goods and services and their consumption, we have a different set of priorities and trade-offs from those that derive from a definition of well-being as expanding the freedom people have to make life choices relevant to them.³ It is important to note that the freedom to make life choices is also influenced by technological change and the disruptive impact it has on social life, and the future of work and places of work (we discussed these themes in last year’s Benefits Barometer).

Globally, there has been a move to rethink and reconceptualise how we measure societal progress beyond simply what has been produced in a particular period. The notion of well-being is not just about what is produced by human beings and how that has contributed to their welfare. It is also about the well-being of the planet and the importance of accounting for the negative externalities of production and the impact they have on our finite resources. (These environmental impacts are beyond the scope of our discussion, which focuses on a broader understanding of individual and societal well-being.)

For example, in January 2016, the United Nations Development Programme (UNDP) formulated a set of 17 sustainable development goals (SDGs) in conjunction with some 170 countries and territories. The idea was to:

• focus international attention on key areas of social impact such as poverty alleviation, inequality, good governance, climate change and disaster risk, health and sustainability
• provide support on how governments could integrate these concepts into the national development plans and policies

To some extent, these 17 goals represent a measure of political compromise between the 170 countries involved. That said, they represent a step in the right direction. Most importantly, they highlight how interconnected each of these initiatives is to each other. For this reason, the project represents the ultimate multistakeholder initiative – only this time, on a global scale.

The challenge comes, though, in identifying an effective and robust way to measure well-being that can provide appropriate peer-to-peer comparisons.

One of the most common ways to measure success at a social and macro-economic level is to use gross domestic product (GDP) – the total value of a country’s domestic output in a given year. This value is based on the market prices of goods and services bought and sold that year, which presents a significant limitation: GDP excludes non-market or non-exchange activities such as housework, care work and digital value (goods exchanged over the internet; value generated by open source software and services and digital platforms).

The 2018 Equity Gilt Study by Barclays Research states that traditional macro-models (with GDP or national output at their centre) ‘struggle to explain the puzzles behind weak output growth, low productivity, muted wage increases and subdued inflation’.⁵ This requires adjusting the theoretical toolkit which guides our economic analysis to include broader measures of societal well-being. For instance, with the rapid technological changes of the last few decades, the manufacturing-focused concept of GDP often fails to capture digital quality improvements and the build-up of intangible (or even social) capital. Moreover, current approaches to measurement often understate the contribution of the digital economy. Policy analysis needs to expand beyond GDP in assessing well-being and progress.⁶

In addition, high growth has not always implied lower inequality (not all boats have been lifted by the rising tide), and per capita measures of national output paint a mixed picture in a country as unequal as South Africa.

In response to some of the weaknesses in GDP measurement, many institutions have developed alternative and complementary measurements aimed at painting a fuller picture of the dimensions that contribute to individual and collective well-being. For example, the Kingdom of Bhutan introduced the Gross National Happiness (GNH) Index. This looks at living standards, education, healthcare, the environment, community vitality, time use, psychological well-being, good governance, and the resilience and promotion of culture. The UN Sustainable Development Solutions Network publishes the World Happiness Report, a composite indicator consisting of four variables which constitute happiness or well-being (or both) in the broadest sense. These include having someone to count on, generosity, freedom to make life choices, and the absence of corruption.

What was needed was an index that could provide a framework for strategic thinking about well-being both at a national policy level and at a corporate policy level. In that regard, perhaps the best work done to date has been provided by the Social Progress Imperative, the non-profit organisation behind the Social Progress Index. Born out of conversations held at the World Economic Forum, this is an aggregate index of basic human needs (nutrition, water and sanitation, safety and shelter), foundations of well-being (access to information and communication technology, basic knowledge, health and wellness, and environmental quality) and opportunity (personal rights, freedom of choice, inclusion and access to advanced education) that are loosely aligned to the 17 SDGs. What makes this measure distinctively different is that it is the first measure of social performance that is independent of economic indicators. As Michael Green, the CEO of the Social Progress Imperative pointed out in an interview in The Actuary:

We measure social progress independently of economic progress, not because we think the economy doesn’t matter, but because then we can look at the relationship between economic and social progress, and try and unpick this question of what ‘inclusive growth’ is. In so many places we are seeing the economy growing but people’s lives are not getting better.⁷

The Social Progress Index provides a basis for translating the basic concepts reflected in the 17 SDGs into an action plan that can be applied to both countries and companies in their strategic planning agendas. Given the fact that different countries and different businesses face different challenges, the Social Progress Index allows groups to compare themselves to their appropriate peer group. Green emphasises that by using this lens, it’s no longer about which country or company ranks first:

When we look at which countries overperform on social progress relative to their GDP, it’s not Denmark or any of the other usual suspects; it’s Nepal, Malawi, Costa Rica and Ghana. That’s important to say, because it’s a group of developing countries doing a really good job, which sometimes gets forgotten, and it provides much better examples of peer learning for the poorest countries.⁸

Similarly, when the index is applied at the corporate level, it forces companies to think about the communities that are important to their supply chains. This has critical relevance for our discussions in South Africa, particularly as it relates to enterprise and supply chain development for small, medium and micro-sized enterprises (SMMEs). In effect, the index provides a roadmap for how corporates can engage with other stakeholders in their ecosystem, both private and public, to ensure that these collaborations employ a common language that can be applied consistently to address those needs that are greatest to that ecosystem. All these measurements highlight two issues that are central to both evaluating and attaining individual well-being and a well-being economy: an enabling ecosystem (social, economic and environmental) and social capital (networks between individuals and groups) that facilitate and expand our freedom to make key life choices that resonate with our respective contexts. The social contract that underpins the roles that different stakeholder groups play in the pursuit of greater well-being is also key.

Levels of well-being

Well-being plays itself out at multiple levels, and ought to be pursued by different stakeholders at all levels.

Individual well-being can exist only in a society whose institutions (both formal and informal) affirm the importance of this, in both form and substance. From a macro-economic perspective, well-being is an aspirational framework based primarily on the identification and resolution of needs, rather than the design of goods and services for transactional and profit purposes.

In this Benefits Barometer, we pay special attention to how different stakeholders interact to create not only a well-being economy but also places of work that are characterised by a focus on achieving well-being for all stakeholders: policymakers, service providers, employers, customers, employees and leaders alike.

Policymakers have an important role to play in shifting the debates away from a narrow focus on growth targets. Much can be read from the recent focus on ‘inclusive growth’ rather than just ‘growth’. But what does this mean and what are the modalities to achieve inclusive growth? The policy debate is yet to shift towards a broader focus on multidimensional well-being. This is very important in an economy where periods of high growth have been largely unaccompanied by increased employment and a more equitable distribution of income.

For financial service and benefits providers, there is an opportunity to develop financial and other products and services that best respond to customer and end-user needs. According to the Boston Consulting Group (BCG), 70% of South African adults have a transactional account; yet BCG’s analysis finds key gaps in the usage, suitability and sustainability of these products.⁹  Two related observations reveal why this is the case: firstly, South African society is largely cash-oriented, with transaction accounts mainly used to ‘park money temporarily’. Secondly, informal channels such as mashonisas (lenders or, colloquially, ‘loan sharks’), stokvels, and friends and family make up a larger share of the credit market than formal channels, with unsecured personal credit growing faster than national output. Coupled with an insurance market dominated by funeral and burial coverage, this indicates that formal solutions have a long way to go in addressing the financial needs of the majority. The numbers reinforce the point: for every ten adults in South Africa, eight insurance policies are in place.¹⁰

A key element that’s been missing from the role of different stakeholders is embedded in the well-being approach we propose in this publication: a focus on ‘societal ties’ and ‘social capital’ as key determinants in financial decision-making among the majority. This is not just the case for those outside formal employment or entrepreneurial activity, as many of them use formal and informal solutions in parallel (something we discussed in previous editions of the publication).

From the employer’s perspective, what role can the workplace play in strengthening the well-being ecosystem being pursued? If as noted, the workplace is a microcosm of the broader South African society, organisations need to view themselves not only as employers that should pursue goals of transformation, diversity, inclusion and social cohesion. As producers and distributors, they can create products and services, respond to social problems and challenges, and present more integrated strategic plans than has been the case for differentiation, innovation and bottom-line growth. Moreover, as we suggest in this Benefits Barometer, there is an opportunity for organisations to build supportive industry clusters (including small business) and facilitate investment in areas where there is great potential to diversify the sources of productive economic activity in South Africa.

Our journey does not end there. This is an ongoing exploration of ideas, some of which are still in their early stages, aimed at challenging the assumptions of all stakeholders about what we have all understood to be measures or markers of individual well-being. As discussed above, at an individual level, conventional economic theory (through its focus on ‘utility’ derived from consumption) has tied well-being and social progress to the expansion of things we can acquire in a transactional exchange for consumption rather than anything else that is valuable and not necessarily associated with money changing hands. At an economy-wide level, this has created an environment of social isolation, deep mistrust between different stakeholders, and approaches facilitated by self-interest which have led to a zero-sum approach to problem-solving. In this narrative, we are making the call for greater collaboration between different stakeholders in pursuit of individual and collective well-being.

We have mentioned that we will need to rethink the metrics in our theoretical toolkit used to measure progress and well-being. Our starting point is that South African society is characterised by structural features which make it unique, and it therefore needs unique, multistakeholder solutions. Such solutions require an understanding that different role-players bring different value to the well-being ecosystem, and each stand to benefit in different ways.

In subsequent chapters, we discuss structural barriers in South Africa that limit the development of social cohesion and explore the potential of a multistakeholder approach embedded in a social contract that prioritises well-being.

References

1, 2: Fioramonti, L. 2017. Well-being Economy: Success in a World Without Growth, Pan MacMillan, Johannesburg (book).
3 Helliwell, J, Huang, H, Wang, S & Shiplett, H. 2018. International Migration and World Happiness. In Helliwell, JF, Layard, R & Sachs, JD (eds): World Happiness Report 2018 (online).
4 United Nations Development Programme. 2018. Sustainable development goals, 14 July 2018 (online).
5 Barclays Research. 2018. Macros models don’t take into account tech advances, says Barclays, MarketBrains, 12 April 2018 (online).
6 Barclays Research (2018).
7 Gregson, G. 2018. Signposts to success from Michael Green, The Actuary (online).
8 Gregson (2018).
9, 10: Kessler, K, Ikdal, AS, Naidoo, E, Portafaix, A, Hendrickson, J, Boje, A & Rabec, D. 2017. Improving Financial Inclusion in South Africa, Boston Consulting Group (online).