SA’s record unemployment strains social welfare

Kopano Gumbi and Joe Bavier - South Africa's African National Congress (ANC), fighting to extend its 30-year grip on power in elections this month, would like to cast the government programmes that support Dalene Raiters and her family as a success story.

But the 48-year-old doesn't see it that way.

"The ANC, I don't want to even talk to them," an angry Raiters told Reuters from the single room in Johannesburg she shares with her sons and grandson. "[Nelson] Mandela's dream is not their dream."

With record unemployment and a moribund economy hitting support among voters, the ANC is touting South Africa's welfare system - a developing world rarity - as a landmark achievement.

"These grants and subsidies do much more than give people what they need to live," President Cyril Ramaphosa said in February. "They are an investment in the future."

But the growing number of people requiring assistance - over 24 million this year, against a tax base of just 7.1 million - is straining the system.

Its future could depend on who in a field that includes two dominant parties espousing vastly divergent political visions - the Economic Freedom Fighters (EFF) or Democratic Alliance - the ANC chooses as a coalition partner if it loses its majority, as polls suggest.

"It's an enormous mark of failure, and it is not sustainable ... We're on a very risky path," said Ann Bernstein, director of the Centre for Development and Enterprise (CDE), a Johannesburg-based think-tank.

Economic failure

Social security and economic prosperity were bedrock tenets of ANC policy when it won power under anti-apartheid hero Mandela in 1994.

But today more than 60% of South Africans live in poverty, according to the World Bank, while a decade of economic stagnation has pushed unemployment above 32%, nearly 10 points higher than 30 years ago. Over a third of the population receives cash grants and other social support.

During the pandemic, the government created a new benefit for the working-age unemployed accessed by over 6 million people. Though meant to be temporary, it was extended earlier this year, against the advice of finance minister Enoch Godongwana.

For Thabo Mbeki - an ANC leader and South Africa's president from 1999 to 2008 - the welfare system was never intended to be a cure for poverty and unemployment. Instead, the goal was to grow an inclusive economy so more people could earn an income.

"That hasn't worked as well as it should. And I think that objective, we need to get back to it," he told Reuters.

Dalene Raiters lost her job at a local primary school 16 years ago. Her adult son is also jobless. Like many South Africans, their entire family of four lives off the grants of those who qualify.

For Raiters that means the R1 080 per month she receives for two minor dependents - her teenage boy and grandson supplemented with handouts from a local mosque, feeding schemes or odd jobs she does for neighbours.

It's never enough.

"Sometimes it breaks my heart," she said, in tears.

‘Doomsday coalition’

While the ANC denies it will need a coalition, most polls predict an end to its single-party governance after 29 May.

The business-friendly, centre-right Democratic Alliance (DA) - the largest opposition party - would seem an awkward fit.

While it is promising to increase the value of select grants and convert the pandemic-era payment into a job-seekers grant, it is primarily focused on job creation.

It wants to relax labour laws and do away with affirmative action aimed at redressing apartheid-era discrimination.

Though the DA squarely blames the ANC for the country's current troubles, it has not ruled out partnering with its ideological opponent to prevent what leader John Steenhuisen dubs a "doomsday coalition" of the ANC and the Marxist EFF.

"I've seen the mass emigration from places like Zimbabwe and Venezuela. I've seen the starvation," Steenhuisen told Reuters. "I don't want that for South Africa."

Spooked investors

The EFF, which has stated its desire for the finance portfolio were it to partner with the ANC, did not respond to repeated requests for an interview.

Its demands for land redistribution and the nationalisation of mines and banks have long spooked investors.

And its election manifesto calls for a doubling of existing social benefits across the board, the establishment of a new grant for unemployed university graduates and more free public services for the poor.

Michael Sachs, an economist at the Southern Centre for Inequality Studies, said the system currently has the resources to support its intended beneficiaries: children and pensioners.

What it can't do is cope with the effects of skyrocketing unemployment and formal sector stagnation.

"If those social problems continue to mount and the only answer of government is to provide more social grants, then eventually it will become unsustainable, definitely," he said.

For Raiters, the answer isn't more welfare benefits: only work will give the next generation a chance.

"I know I'm not going to live a long time," she said. "But for the future, I hope my grandson can get a better job." - Reuters