The World Bank said South Africa, which ranks among the world\u2019s top 10 spenders on social assistance, could consider a range of reforms to its R156 billion ($15 billion) annual welfare program to make it more cost-effective while expanding support for the unemployed.<\/p>\n
While more than 18 million South Africans receive welfare payments, and almost two thirds benefit directly or indirectly from the grants, only child support, old-age pensions, and disability payments are handed out to people who haven\u2019t paid into a separate unemployment insurance system. Despite the shortcomings, those welfare payments equate to some 3.3% of gross domestic product.<\/p>\n
The country could consider a job-seekers grant, community works progams or differentiating child support payments so that the poorest families get additional help, the World Bank said in a report released Thursday. A job-seekers grant, set at R350 a month, could cost R16.2 billion rand a year, it said.<\/p>\n
\u201cThe dilemma of the future of South Africa\u2019s social assistance system rests in the opposing pull of these two forces: The limited political appetite for cost-saving reforms and the need to consolidate expenditures,\u201d the World Bank said. \u201cFeasible options for broader reform hence need to balance political will and the need to contain costs.\u201d<\/p>\n
South Africa\u2019s welfare program has been hailed as the single biggest achievement of the post-apartheid government in reducing income and wealth inequality, which nevertheless remains the world\u2019s highest. Unemployment is at a record of more than 34% due to the Covid-19 pandemic, with almost four out of five 18-24 year-olds without work.<\/p>\n
Unemployment insurance is contributory, however, and therefore only available to those who have previously worked.<\/p>\n
While civil society organisations have called for a basic income grant to be implemented and president Cyril Ramaphosa has said one will be investigated, business organizations and the World Bank have said it\u2019s unlikely to be affordable.<\/p>\n
Public and community works programs should be considered though they are short-term in nature and don\u2019t address South African unemployment, which is structural and tied to factors such as a weak education system, the Washington-based lender said.<\/p>\n
\u201cAs the private sector recovers from the pandemic it would be important to continue the public employment programs,\u201d said Victoria Monchuk, a senior economist at the World Bank, in a presentation Thursday.<\/p>\n