The rates of unemployment in South Africa have surged to a level where they are out of control. It has become one of the top regions in terms of unemployment due to various reasons. In today’s world, unemployment has become an issue that is impossible to control, and when it comes to African countries, especially South Africa, unemployment is a rage monster.
The government has taken a list of measures to control unemployment in the region by launching new job series or assistance programs for the financially deprived people. But these programs are also a target of criticism as some people claim they have negatively impacted the unemployment rates while others say that social grants have destroyed the country and the people’s collective will for work.
Let’s discuss both aspects and see the impacts of social grants on unemployment rates.
Why Has the Government Launched Social Grant Programs?
Basically, unemployment is a long-term problem that requires years to be solved. Our government is taking steps to decrease the unemployment rates but still, there is no mechanism to craft new jobs in the market. The rising rates of unemployment are out of control despite the attempts of the government.
Therefore, the government launched a number of social grant programs for people who are unable to afford daily expenses. Some of these programs are designed for all kinds of citizens while others are only for unemployed individuals. Additionally, there are a few private organizations working in the country to support unemployed youth.
The purpose of these organizations is to assist monetarily unemployed people and provide them with enough resources so they can start a business. People from all kinds of backgrounds apply for assistance in these programs to start their new businesses. The business market is increasing in South Africa; therefore, people are rushing to start businesses rather than searching for jobs.
How Does The Social Grant Program Work?
To understand the impact of social grants on the unemployment rates, we need to see the mechanism of the social grants system. Almost all the social grant systems have similar eligibility criteria, they support only the people who deserve grants rather than the people who are enjoying resources. There is a dedicated grant system for the unemployed called the Unemployment Insurance Fund.
The aim of UIF is to assist the unemployed people who have contributed to the UIF. Another system called SASSA SRD R350 grant for the unemployed people. It is also for the people who have lost their jobs or were fired for no reason and are searching for employment.
Each social grant has an eligibility criteria, if a person falls under the criteria, he can get the social grant. The grant is for a limited time as some grants are given to the applicants for 3 days while others are for 6 months to 12 months. The applicant cannot get grants after reaching the limit.
Impacts Of Social Grants On The Unemployment Rates
South Africa lacks research centers; therefore, we do not have an adequate amount of data related to social grants and unemployment rates. If we review the history of unemployment rates, 2007 to 2009 was the only time when unemployment decreased in South Africa. Rates of unemployment skyrocketed during the covid-19 then post-pandemic period.
Social security grants were also launched during and post-COVID-19 period in which poverty and inflation were at their peak. We cannot say that social security has significantly reduced the rates of unemployment because it needs almost 5 years to reduce poverty anyone unemployment rates in South Africa.
The problem is we do not have a way to measure the success of social grant systems and reduced unemployment rates. If we review the job search tendency in South Africans, the job search has decreased according to the results. Additionally, it is seen that the quality of life of the people has improved.
On the other hand, experts claim that the reduced job search is because people have learned helplessness. It is a term coined by psychologists which indicates that people believe their actions will not bear fruit so they do not search for jobs. Instead of it, they rely upon social grants.
IMF Report
The IMF has worked on unemployment and social grants in South Africa in order to understand the core problem and the benefits of social grants. The IMF report discusses all the reasons and their solutions. The study covers all kinds of unemployed people.
Key Findings
The IMF report states that the people who are less prone to get employment, such as the old people and disabled ones receiving grants are benefitting from the amount. However, the family members of these recipients who also receive grants indirectly are less likely to find a job and will try to manage their budget in the received amount.
The study clearly indicates that social grants are creating a loop in which the recipients are benefiting but the indirect receivers are less likely to go in the field. A similar effect is also seen in the other welfare states and it is known as the welfare trap. The term indicates that social welfare programs, such as social grants and taxation systems increase the tendency of people to rely upon grants rather than working in the field.
Other Research Finds
Other studies consider the positive effect of social grants on unemployment as a “Misconception.” These studies claim that people who get social grants are less likely to search for jobs and will like to rely upon social grants instead of working in the field. These studies deny President Cyril Ramaphosa’s perspective that social grants can stimulate the growth of the economy and increase well-being in society.
Impact On Non-Recipients
Nearly 26 million people are receiving social grants and 11% of the country’s budget is dedicated to money deserving people. However, the majority of people neglect the fact that the amount that is given to the needy people comes from the taxes upon the non-recipients. When the numbers of social grant recipients increase, the taxes upon the non-recipients also rise which creates an atmosphere of uncertainty, inflation, and non-recipients consider themselves as disadvantaged.
There are both positive and negative impacts of social grants but if you carefully analyze the situation, you will see that unemployment is increasing due to the social grants. However, the area is very complicated to study so we need to study more in order to understand unemployment rates and social grants relation. I hope this information will help you in the future, thank you.