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The ANC Youth League (ANCYL) has called for a permanent Social Relief of Distress grant (SRD grant) for the unemployed – including one which exceeds minimum wage for those who have a degree.
During the ANCYL’s 79th birthday celebrations in Mpumalanga on Sunday (10 September), its president Collen Malatji said the government must make the SRD grant permanent and increase it to R1,500 per month.
On top of this, he added that unemployed graduates should be provided with a similar grant of R4,500 per month.
“We [ANCYL] are calling upon the ANC-led government to increase and introduce an unemployment grant,” said Malatji.
“We are saying that while young people are still looking for opportunities, there must be a grant provided to them so they’re able to move around and look for those opportunities.
“While the government is still looking for solutions, the R350 must be increased to R1,500, and unemployed graduates with degrees must be paid R4,500 per month – until the issue of unemployment is resolved,” he added.
This new call for a grant of R4,500 per month for unemployed graduates would mean those looking for a job after university would be getting just over the national minimum wage every month until they secure a suitable job.
As of 1 March 2023, the national minimum wage, the base number for a range of calculations, increased by 9.6% from R23.19 to R25.42 per hour. This means if a worker averages 22 days of eight hours, each will have to be paid R4,474 per month.
This call from the ANCYL likely comes from the sentiments voiced by President Cyril Ramaphosa, who stated over the weekend that the R350 grant laid the foundation for introducing a Basic Income Grant (BIG).
He said the successful implementation of the R350 grant has shown that the government can roll out a BIG of a similar nature.
However, The Sunday Times reported that the Treasury told President Cyril Ramaphosa and his ministers that the government faces unprecedented revenue and spending pressures.
The financial pressure is a result of a challenging economic position because of extensive load-shedding, sticky inflation, and poor growth.
Treasury noted that if the government wanted to keep the R350 SRD grant as is, policies would have to implement at least a two percentage point increase in VAT. This is without the consideration of the proposed unemployment grant for graduates.
According to the report, if the government wants to keep the R350 SRD grant going, it will need to raise R42 billion this year – or R55 million if it is raised to R450. This would require VAT to be hiked by 1% or 2%, respectively.
An increase to R1,500 would hike this requirement even more.
The other option is to cut numerous government initiatives, including visible policing, the expanded public works programme, and the mine health and safety inspectorate. Other initiatives that face the chopping block include welfare support, environmental protection, and intervention programmes on food security and informal settlement upgrades.
The National Treasury revealed that the budget moved to a deficit of R143.8 billion for July, the largest since 2004 and wider than the R115.5 billion forecast by economists.
Godongwana said there are three ways to address the revenue shortfall and fiscal deficit: increase taxes, borrow more money, or cut spending.
“I suspect you may need a combination of these instruments moving forward. You will probably get that during the medium-term budget policy statement,” he said.
The Finance Minister also said the task of balancing the budget is made more difficult because of the general elections next year.
“During an election, nobody wants to increase taxes, but everybody wants to increase expenditure to buy votes. You can’t have both,” he said.
“I said in February that if some of the things we are funding now become a permanent fixture [such as the SRD grant], we must find a revenue source for them.”
This means the call for such grants by Malatji is simply unaffordable for South Africa, and Godongwana cautioned against thinking that things that were easily funded during a commodity boom and revenue overruns can continue.
Read: Social unrest warning for South Africa as budget cuts loom
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