JOHANNESBURG, 2 February 2011 (IRIN) - With nearly one in three South Africans expected to receive state assistance in the form of welfare benefits during the 2011/12 financial year, commentators are wondering how the country can afford to keep providing an ever expanding social safety net.

According to the latest South Africa Survey, released on 1 February by independent think-tank the South African Institute of Race Relations (SAIRR), the number of social grant beneficiaries has increased by more than 300 percent in the past nine years, while the number of registered individual taxpayers has grown at a much slower rate.

Only about 12 percent of South Africans (5.9 million individuals) paid personal income tax in 2009/10, while 14 million claimed child-support, old-age, disability or other types of social grants.

"South Africa is becoming a welfare state... Grants risk creating a dependency syndrome," commented Nachi Majoe, a researcher at SAIRR in a press release.

In 2010, the government increased state pensions by 7 percent and extended the child-support grant from a previous age limit of 15 to include children up to age 18. Economists responded by calling South Africa's ratio of taxpayers to grant recipients unsustainable, but others point to evidence that social grants provide an important safety net for millions of poor South Africans and a springboard to better opportunities for some.

A 2009 study by the Institute for Poverty, Land and Agrarian Studies at the University of the Western Cape, which looked at how recipients used their grants, found that some used them to support informal economic activities, while others undertook care work in the home, allowing other household members to look for paid work.

"South Africa has international levels of poverty and inequality," pointed out Ivan Turok, deputy executive director of the Economic Performance and Development Unit at the Human Sciences Research Council.
"We're not a Scandinavian country where any increase in social grants might be a bit of a luxury; this is desperate poverty we're talking about so anything the state can do to improve welfare conditions is very important, but we do have to take into account affordability," he told IRIN.

He added that a segment of the population was "doing very well" and could probably afford larger tax contributions.

One in four out of work

At the other end of the economic spectrum, the Survey cites a national unemployment rate of 25 percent, with 57 percent of young black South Africans and 63 percent of black South African women aged 15-24 out of work.

South Africa's unemployment rate had been on a downward trend after a 2003 peak, but started climbing again in 2008.

Government is keen to reduce both its social grant expenditure and the number of jobless youths on the streets, but its efforts at job creation have fallen short.

The South Africa Survey reports that the average job created by Phase 2 of the Expanded Public Works Programme (EPWP) – the government's largest job creation initiative - lasts only 46 days and pays 64 Rand (US$9) a day.

Lucy Holborn, a researcher at SAIRR, said most of the jobs were unskilled and provided little useful work experience. "In the long-term scheme of things, I don't think a programme like this is going to be the answer," she told IRIN.

South Africa's parliament is considering four new pieces of labour legislation that would add a number of new regulations to the hiring of temporary and casual labour. If passed, employers will have to justify the use of temporary versus permanent employees.

The bills are backed by the Congress of South African Trade Unions (COSATU), but critics like Holborn argue that the answer to South Africa's unemployment crisis is fewer not more labour regulations.

She pointed out that young people in particular, rely on temporary and casual work. "We are worried that those bills, if they come into force, would have a negative effect on employment."

A better model?

One answer to South Africa's high rates of poverty and unemployment, argued Turok of the Human Sciences Research Council, are programmes that empower communities to come up with their own solutions. He pointed to the Community Works Programme, which the government started implementing in some of the country's poorest districts in 2010.

Participants are paid to carry out steady, part-time work according to needs which their communities help identify, such as repairing roads or caring for the chronically ill.

"I think it's a better model [than EPWP]," said Turok. "It's empowering communities and provides some of the answers to youth unemployment; it needs to be massively expanded."

Source: The Integrated Regional Information Networks (http://www.irinnews.org )

I think strategy is needed to be put in place to encourage paying of tax, which will likely curb this trend.