The government can still afford to pay social grants for the unemployed despite the US’s 30% tariffs on local exports, which could result in the country shedding 300,000 jobs and losing billions of rand in tax revenue. 

Black Sash, a human rights advocacy group, said the government should stop corruption to afford social grants that are above the poverty line.

The group commented after the Free Market Foundation lashed out at the government for what it described as making the grants a permanent income generation for the unemployed instead of providing skills and creating job opportunities for young people.

Black Sash said the country does have a lot of money, which has been spent irresponsibly.

“We just need to tighten where we think we are losing money, such as corruption, so that we can redirect the money to the basic services rather than to say there is no money because of the tariffs,” said Black Sash’s communications and media manager, Oliver Meth.

Meth said the government should focus on creating job opportunities for young people.

He said it was unjustifiable to say the country would run into bankruptcy if there was no money coming from another country.

“There is a lot of money in this country, but it’s just that it’s not directed to the right responsibility,” said Meth.

He said every year, the country was facing an increase in unemployment.

The Black Sash welcomed the government’s move on June 1 to replace the Social Relief Grant (SRG), which paid each unemployed recipient R350 per month, with the Universal Basic Income Grant (UBIG), which increased the payment to R720. 

Black Sash had, in its May statement, described the introduction of UBIG as the reaffirmation of the Government of National Unity’s commitment to ensuring long-term income support for those living in poverty and unemployed.

The group had felt that R370 was far below the food poverty line and was insufficient to restore dignity or break the cycle of poverty.

“Black Sash stands ready to engage with policymakers and civil society to ensure that the Basic Income Grant becomes a transformative tool for building a more just, equitable society — one where everyone has the means to live in dignity,” read its May statement.

However, Free Market Foundation President Eustace Davies released a statement on Thursday expressing fear that the grant would subject the unemployed to permanent dependency on government handouts.   

It was estimated in 2024 that there would be 9.24 million grant recipients in 2024/25, and the government had set aside R33.7 billion for this. 

Davies said the grant was defeating the government’s purpose of making young people self-sustainable.  

He said that unemployed persons who attempt to earn even a modest income through part-time work, informal trading, or entry-level employment risk being immediately disqualified from the grant.

“The reward for productive effort becomes the loss of support,” said Davies. 

He said grants do not help recipients to progress in their lives, but instead, they remain idle.

“When the state creates a condition in which individuals are penalised for trying to lift themselves out of poverty, it arrests their development and saps their self-respect. A population so becomes compliant but not empowered,” he said.

He said the state where grants were in a permanent arrangement could be an indication of economic failure. 

“Unemployment remains structurally high, especially among the youth, and entrepreneurship continues to be stifled under layers of bureaucracy,” he said.

Davies said South Africa should look at the model of Singapore and Switzerland, which he said were economically successful. 

“In Singapore, the emphasis is on education, skills, and enterprise, not permanent grants. 

“Switzerland keeps welfare limited and locally administered, with strong expectations of personal responsibility. 

“For decades, Hong Kong allowed markets to allocate labour and capital with minimal interference. The result in each case was widespread prosperity,” he said.

To keep financing the grants, Davies said, the Treasury will have to introduce taxes, which would mean punishing those who are already carrying the burden of employment creation, capital formation, and tax compliance. 

“A policy that extracts more from the productive to fund inactivity cannot produce long-term stability or growth,” he said.

According to Statistics SA’s report released in the first quarter of 2025, the number of employed people decreased from 17.1 million to 16.8 million. 

This was while the country was still expecting to shed approximately 300,000 more jobs when the effect of the US’s 30% tariffs on the country’s exports kicks in.

bongani.hans@inl.co.za  

Source link