More get grants than have jobs

REFORM: ELIMINATE PROVINCES, FOCUS ON GROWTH We’re on our way to having 19m people dependent on some form of social grant or pension – Schüssler.

There are presently 17.6 million people receiving grants, against 16.2 million people with jobs.

There are more people receiving social grants in SA than there are people with jobs. The budget highlighted that there are 17.6 million people receiving grants, against the 16.2 million people with jobs. In 2001, there were 12.5 million people employed and four million people receiving social grants, according to an Institute of Race Relations survey.

Meanwhile, public sector jobs have grown from 2.1 million to 2.7 million since 2008. Public servants’ salaries – more than a third higher than the private sector average – account for nearly half the annual budget. “This situation is not sustainable,” Efficient Group’s Dawie Roodt told the Austrian Business Chamber.

“SA has become a country of social upliftment, rather than … of economic upliftment.”

Instead of focusing on job creation, he said government should look at economic growth as the primary engine of job creation, flanked by privatisation, massive infrastructure development and a world-class skills development programme.

Mike Schüssler of Economists. co.za said that worryingly, of the about 16 million people with jobs, 10 million are in the formal sector and only 7.5 million of those pay tax. “If you add pensioners, we are on our way to having 19 million people who are dependent on some form of social grant or pension. This leaves the few who are working to carry the burden.”

Narius Moloto, National Council of Trade Unions’ secretary-general, said while the tax base is shrinking, government welfare grants are ballooning out of control. “The cash grants system is a form of political patronage and does not encourage upward progression in the economy.

“The way it is structured at present entrenches dependency. With some of the money spent on social grants, we could have established cooperatives and micro-enterprises in poor communities with a view to permanently weaning them off welfare.”

A quick way to cut spending is to eliminate provinces, said Moloto. “SA is over-administered. There’s huge duplication between national, provincial and local government. We can save billions a year by eliminating duplication.

“We’ve consistently argued for the building of an African economy based on self-reliance rather than dependency. Creating millions of jobs is the only way out of the mess this government has created, but it continues to rely on failed ideologies imported from elsewhere. If we are going to learn from abroad, let’s look at countries with full employment and encourage micro-enterprises as the first step.”

The ultimate goal of any welfare programme is to make itself redundant, added Moloto. He cited the success of Brazil’s family allowance programme, whereby 0.5% of GDP goes to social grants, but with conditions. Recipients must enrol their children in schools, meet school attendance targets and submit to basic health supervision. The World Bank said this programme halved extreme poverty, increased life expectancy and reduced income equality by 15% in under 15 years.