More South Africans receive grants than have jobs: IRR Reports

The South African Institution of Race Relations (IRR) have released a statement illustrating their findings from their latest South Africa Survey. The press release is titled: “More South Africans receive grants than have jobs – a recipe for chaos and violence” – and paints a worrying picture for the future of the country.

The findings reveal that more South Africans receive welfare grants than have jobs. As of 2016, 15.5 million people have jobs in South Africa, while over 17 million people receive social grants, reports IRR Analyst Gerbrandt van Heerden.

Van Heerden commented on the findings below:

“The numbers are a recipe for social and political chaos. With South Africa formally in recession, the government will find it difficult to afford the cost of its social grants programme. As the economy stagnates, and tax revenue slows, demand for more grants will increase. The government will then have to cut other areas of expenditure in order to meet popular demands for more and higher grants. We predict that this will lead to much higher levels of violent protest action.”

The IRR Survey illustrates that initial numbers of merely 3.9 million grant receivers has grown by 328%. Job availability has only grown by 24%.

With a flagging economy, expansion of the grant system (which seems inevitable under the current trend) will come under great strain, and the government will struggle to increase the value of grants to keep up with rising costs.

Van Heerden argues that while the social grants have helped to improve living standards, they are precarious, as grant rollouts will struggle to expand further, and will eventually lead to declining living standards as grants are unable to keep up with prices. As living standards drop, social cohesion will then breakdown and lead to unrest. This hearkens to an issue that IRR CEO Frans Cronje has discussed in the past, the “crisis of rising expectations”. As living standards improve, people will want more, and will be less tolerant of drops in those living standards. This reaches a peak, where living standards cannot improve fast enough or at all, causing angst and frustration in the population.

To maintain the grant system, so to avoid a political crisis and a breakdown in social cohesion, the state may redirect funds from other parts of the budget, leading to a lack of necessary capital for the functioning of other state apparatus. This is especially troublesome, as the grant system acts as a form of ‘sink hole’, with little return on investment compared to other functions. Unfortunately, in an effort to maintain the system so necessary for maintaining their votes and societal order, the state may sacrifice the budgets of more important functions (like security) in order to keep the grant system afloat.

This crisis comes during a massive economic slump, culminating due to years of economic restrictions, trade union meddling and security incompetence leading to South Africa being a less than ideal investment location for locals and foreigners. As such, employment has struggled to grow, with the state opting to rather employ civil servants, who continue to drain the fiscus rather than generate real wealth.

While the grant system has improved living conditions, it has proved to be unsustainable. While grants are meant to be stopgaps against destitution, they can breed apathy and dependence. Most importantly, grants drain wealth without producing. South Africa needs real employment so to produce real wealth. With real employment will come a sustainable model of wealth generation and the dignity of work.