The government has expressed aims to have the country’s social security system linked to the state’s job creation policy.
These sentiments come as South Africa’s comprehensive social security system is ranked among the largest within emerging markets.
“There is little to no linkage between the social security system and the policy goal of increasing employment. Government is considering ways to reform the grant system and consolidate public employment initiatives.
SA’s social security system beats developing-country peers
“Between 2015 and 2020, spending on social protection averaged 4.6% of GDP [gross domestic product]. This compared with 1.6% for developing-country peers.
“Over the next three years, 30.6% of the population will receive some form of social grant. And this is… excluding the Covid-19 social relief of distress grant. The government will also spend R3.4-billion on job creation initiatives in 2024/2025.
“This includes a review of the impact of the skills development funding system. The system… where the levy collected averaged R20.9-billion over the past three years. Proposals will be presented in the 2025 budget.
The official unemployment rate tumbled to 33.2% in the first six months of 2024. This from an average of 32.4% in 2023.
Structural reforms must align grants with job creation
“Structural reforms are needed to increase job creation significantly and sustainably. And to confront the country’s low employment intensity of growth. To address its comparatively low contribution of informal and self-employment. And to strengthen the effectiveness of the government’s suite of employment initiatives,” said Finance Minister Enoch Godongwana.
After the outbreak of Covid-19 in 2020, the state introduced the Covid-19 social relief of distress grant. It was to run for six months, to support workers displaced by pandemic lockdowns. This temporary grant has been extended several times.
“A sustainable fiscal approach requires that any permanent addition to spending must be funded through permanent revenue sources. Or through reprioritisation from within the existing fiscal envelope.
Cohesive, integrated system
“A wide range of financial support is provided to unemployed persons. However, these interventions are split across agencies. And they do not function as a cohesive, integrated system,” he said.
He said compared to the National Treasury’s estimates in February, the government’s expenditure for this year will increase. This due to, among other things, the R2.7-billion expenditure that was announced at the time of the main budget. Mainly for the Covid-19 social relief of distress grant.
