South Africa now has more people on social welfare than with jobs and the country’s tax base may not be able to keep pace with the ever-growing number of grant beneficiaries, warns the SA Institute of Race Relations (SAIRR).
According to the research body’s statistics, there were 330 people with jobs for every 100 people on social welfare in 2001. By 2012, the ratio had dropped to 90 people in employment for every 100 social welfare beneficiaries.
SAIRR acting head of research Lerato Moloi said: “If this trend continues, South Africa’s tax base will not grow fast enough to keep supporting the millions of vulnerable individuals who rely on monthly cash transfers from the state.”
Between 1994/95 and 2010/11, the nominal value of tax revenue grew by 491%, from R114 billion to R674 billion. In the same period, the nominal value of social grant expenditure grew by 700%, from R11 billion to R88 billion.
With over 16 million social grant beneficiaries in 2013/14, social grant expenditure is expected to rise to about R113 billion this financial year.
The highest proportions will be spent on old age pensions and child support grant transfers, at 39% and 37%, respectively.
The National Development Plan estimates that about 2.1 million children who are eligible for the child-support grant are not receiving it. If all eligible children received this grant, it would push social grant expenditure up by more than R500 million.
Despite its impact in lifting households out of poverty, such an extensive social grant system in a society where unemployment has doubled since 1994 puts a strain on the country’s tax base, the SAIRR cautions.
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