SA's R284bn grants burden: why job creation must take centre stage

As the unemployment rate remains high in South Africa, with nearly half of the country’s more than 64 million population relying on social grants to cushion them from poverty, civic organisations and an economic expert have called for a sharp focus on growing the economy and creating jobs.

Civic organisations say that while grants provide immediate relief, they are not a long-term solution to poverty. They highlighted a need for comprehensive policies that address the structural causes of poverty, such as unemployment, inadequate education, and unequal access to resources.

In South Africa, approximately 28 million people, or about 47% of the population, rely on the social grants system, which includes old age pensions, disability grants, child support grants, and the Social Relief of Distress Grant.

On the other hand, the official unemployment rate was 31.9% in the fourth quarter of 2024, according to Statistics South Africa’s Quarterly Labour Force Survey. South Africa’s expanded unemployment rate, which includes discouraged job seekers, remained at 41.9%.

The youth aged between 15 and 34 remain vulnerable in the labour market, as the youth unemployment rate sat at 44.6% in the fourth quarter of 2024.

In the Budget recently tabled by Finance Minister Enoch Godongwana, R284.7 billion has been allocated to social grants, to reduce the pressure on poorer households. The country’s 7.9 million personal income taxpayers fund 28 million grant recipients.

Oliver Meth, the national spokesperson for the human rights organisation, Black Sash, said that social grants play a crucial role in alleviating poverty, particularly in low-income communities. 

“For many beneficiaries, these grants are the difference between survival and destitution. They enable recipients to meet basic needs such as food, shelter, and healthcare. However, while grants provide immediate relief, they are not a long-term solution to poverty. There is a need for comprehensive policies that address the structural causes of poverty, such as unemployment, inadequate education, and unequal access to resources,” Meth said.

He added that social grants alone cannot lift people out of poverty in the long term, instead, they can be an important component of a broader social protection floor.

Meth added that the rising cost of living has rendered the current social grant amounts inadequate for covering essential expenses. 

“The grants, while vital, often fail to match the basic costs of survival in a country where inequality is rampant. This is particularly evident for those living in poverty-stricken areas, where high transport costs, expensive food, and limited access to affordable healthcare put additional strain on already stretched resources. Black Sash continues to advocate for increases in social grants and a Basic Income Support Grant to address these issues.” 

Meth said while some may argue that reliance on social grants could become unsustainable, it is crucial to acknowledge that these grants are not a luxury but a lifeline for millions of South Africans who have been left behind in an unequal economy. 

“The idea of sustainability must go beyond cutting grants; it should include addressing the root causes of poverty, such as job creation, access to education, and healthcare, which will reduce the need for grants over time,” he said.

On the social grant increases in the recent Budget, he said while it would be expected that "we" should be grateful for the social grant increases, and the extension of the Social Relief of Distress Grant, it begs the question of whether it is enough of a buffer to counter the Value Added Tax (VAT) increase of 0.5% increase which affects the poor.

Hannes Noëth, executive director of the solidarity movement Solidariteit Helpende Hand, expressed concern over the government’s rising reliance on social grants, highlighting the sustainability of the proposed increase from R285 billion in 2025 to R313 billion in 2027/28.

He said the government’s policy of increasing reliance on social grants does not create real opportunities for people to escape poverty; instead, it keeps them trapped in dependence. The welfare state will ultimately impoverish everyone instead of fostering economic growth, he said.

“Solidariteit Helpende Hand stands for sustainable development plans and community development, and it saddens us that the government once again goes to great lengths to almost boast about grant increases that exceed inflation. At face value, this sends a positive message to the poor and vulnerable groups, but in practice, it increasingly pushes us toward becoming a welfare state,” stated Noëth.

He said the government has not sufficiently focused on economic growth and job creation.

“Helpende Hand believes that the only sustainable way to break the cycle of poverty lies in well-being fostered through job creation, not through dependence on welfare. Education, training, and job creation are the keys to prosperity, and the government should focus on that.” 

Sandi Mbatsha, spokesperson for the Department of Social Development, said research indicates that social grants, especially child support grants, have a positive impact on child development, health, nutrition, educational outcomes, and well-being. 

He said adequacy, or the value of the grants is a challenge because it remains below the poverty line, despite above-inflation increases over the years.

In children, the child support grant is associated with increased school attendance, decreased child hunger, and improved child health and nutrition, he said.

On sustainability, Mbatsha said: “The government continues to assess and adjust grant amounts to ensure they meet the needs of beneficiaries while maintaining fiscal responsibility. During difficult economic periods, increases have been moderated. The government has been able to sustain this grant for more than two decades, and it is very unlikely that it will not be able to sustain it in the future unless there is a significant economic shock. Even if such occurred, it’s more likely that a downwards adjustment will be made, as compared to a withdrawal of the benefit.” 

Economist Duma Gqubule said the government has to increase its spending in the economy to create employment. 

“The government has to increase its spending in the economy and stop the austerity policies. The reason why the economy is not growing is because there is not enough economic spending from the government. The government has to lead the recovery and that will in turn create more jobs. And one cannot expect companies to lead the recovery. The minute we start investing in the economy, in our people and infrastructure, the economy will grow and create jobs,” Gqubule said. 

He said the biggest challenge is that South Africa’s labour force is growing faster than the economy.

Gqubule highlighted the need to expand sectors that employ more women such as health, education, clothing and textile industry, among others.

He said over the years, the government’s spending on infrastructure has dropped by 40%, and described this as suicidal to the economy, as now there are persistent water challenges, issues with electricity, and roads due to aging infrastructure.

He said while a few Presidential Employment Stimulus Programmes such as the Expanded Public Works Programme absorb women and youth, more needed to be done.

On social security spending, he said, all developing countries, including Brazil, have social grants programmes.

gcwalisile.khanyile@inl.co.za