A country where half of the population is dependent on state welfare is no achievement and to then try to abuse it for political gain is reprehensible.
Pres. Cyril Ramaphosa’s comments that social grants could disappear if the ANC is beaten at the polls in the upcoming election shows that it is convenient for the government to keep people dependent rather than empowering them, says Riaan Grobler, head of advisory services at Everest Wealth.
“The state should not boast about the millions of people receiving grants but should instead focus on really growing the economy and creating jobs so that people can be empowered to enter the economy.”
Social wage makes up around 60% of the government’s consolidated budget and some of the money could instead be used to create jobs and encourage entrepreneurship, believes Grobler. Instead, more and more people are made dependent on grants and this can actually discourage more people from looking for work. The unemployment rate increased from 24% in 2018 to more than 30% by the end of 2023 whilst the R350 relief grant was also introduced in this time and has already been further extended on several occasions.
“The government keeps poor people poor through government grants as people are not empowered to be lifted out of poverty but instead remain trapped in it. The state must generate income to promote job creation and break the cycle of poverty.”
According to Grobler, the continued increase in social spending is not only unsustainable but also has the effect that many people’s standard of living will deteriorate further as grants cannot increase at the same rate as the cost of living.
“In the meantime, there is also more and more pressure on a shrinking tax payer base that cannot finance the welfare state. Just over 2.5 million people pay 84% of all personal income tax. Economists have long warned that the tax burden on a smaller number of individuals is getting heavier, with the economy not growing and thousands of taxpayers leaving the country every year.”
Social grants are used as a safety net for unemployment and poverty and only make more and more people dependent on the state without any long-term plan or solution in place.
“The fiscal sustainability of the government’s social wage is being questioned more and more. With youth unemployment at crisis levels, this does not bode well as the number of grant recipients may only increase and the tax payer base will not. The state must stop going out of its way to keep people dependent and, on top of that, create the perception that your allowance can disappear if you vote for another party. Rather, the state must help to uplift and empower people in order to break the cycle of poverty and unemployment.”