New ‘back to school’ grant proposed for South Africa

The Pietermaritzburg Economic Justice and Dignity (PMBEJD) group says that the South African government should introduce a special ‘back to school’ grant in the country to assist parents with preparations for getting their kids ready for the new school year.

“We advocate that the government provides some type of additional grant allocation every January to assist parents with their children’s new school year expenses, thereby securing a sounder foundation to support education, whilst reducing debt incurred at the beginning of the year, which haunts parents throughout the year,” the group said.

“This special Back-to-School grant, targeted directly for the new school year, would provide a focussed investment for improved education outcomes whilst alleviating some of the financial pressures on parents.”

The proposal comes against the backdrop of the rising cost of living in South Africa, with the PMBEJD arguing that measures in place – such as the National Minimum Wage (NMW) and other social grants – not being enough to help the vast majority of the population.

Government, through the Department of Labour and Employment, is proposing an 8% increase in the NMW for 2023, which would take the rate up to R25 per hour.

However, the PMBEJD says this is simply not enough.

“The National Minimum Wage is a poverty wage – it reduces productivity in the workplace, it slows down economic growth, it damages workers health, it compromises the futures of workers children, it makes workers vulnerable, it puts workers in debt,” it said.

“The NMW is set too low; it is not enough to cover the three core worker expenses of food, transport, and electricity.”

The group argued that previous NMW adjustments have not necessarily projected inflation for the coming year, but instead concentrate on what inflation was for the previous term (inflation tracks backwards) and then just adding on a few extra percentage points above the headline inflation at a particular moment in time.

“This means that wages are always playing catchup: the previous year’s wages are eroded by inflation of that year, and so using past inflation data again, puts the workers back where they were in 2022, without protecting wages against future inflation or improving workers’ wages for the upcoming year.”

The group said that projected inflation for the 2023 term, at least for the three core worker expenses of food, transport and electricity should be considered in the annual NMW adjustments.

“Further, the objective for the wage increases should be clear. Part of the original NMW mandate was to progressively improve the baseline wage of low-paid workers, and hence an element of justice to right the apartheid legacy of low wages should be considered.

“The NMW, if used well, could be a valuable tool to improve not only our social stability, education, and health outcomes, but also our economic prospects. The annual deliberations on where the NMW is set at, is important,” the PMBEJD said.

More grants

The national government is under pressure to either introduce new grants or extend and increase current ones to help South Africans make ends meet in the face of high levels of inflation.

So far, the R350 Social Relief Distress grants (SRD grant) has been extended to March 2024 in a bid to give a small bit of relief to millions of South Africans who are still struggling to find work following the 2020/21 Covid-19 pandemic and lockdown.

However, the ANC wants this grant to become a permanent fixture in the country’s social projects, and form part of a universal basic income grant.

Research done by the Department of Social Development has seen this as a viable avenue to decrease poverty in the country – though it would have to be funded by taxpayers for it to be success.

President Cyril Ramaphosa indicated in December that the National Treasury is also currently modelling a new grant to assist job seekers in the country.

With limited resources available to it, however, Treasury would have to make difficult decisions on which additional social relief would be most feasible to implement, who it would be targetted at, and where the funding for such initiatives would come from.

South Africa has over 18 million grant beneficiaries.

Finance Minister Enoch Godongwana announced the extension of the SRD grant to March 2024 during his presentation of the Medium Term Budget Policy Statement in October.

As a result of the extension of the SRD grants, other social grants – such as old age grants and disability grants – will increase lower than inflation, the minister said.

Read: Tax hikes can fund new basic income grant in South Africa: study