GROUNDUP: SRD grant is not keeping people out of work, evidence shows
New research challenges the idea that South Africa’s SRD grant discourages people from seeking work. The evidence suggests cash support can help people look for jobs, but lasting employment still depends on whether those jobs exist.
New research has challenged the notion that South Africa's SRD grant discourages people from seeking employment. The grant, introduced in 2020 to address the Covid-19 crisis, has shown that providing cash support can actually help individuals look for jobs. However, the researchers clarify that lasting employment still depends on the availability of jobs in the market.
President Cyril Ramaphosa announced the SRD grant in April 2020 as part of a R500-billion Covid response. Initially, the government planned to pay the grant to eight million people for six months, but by the end of 2020, only 116,867 people had received payments due to stringent verification processes. These checks, which compared applications against multiple databases, led to significant rejections, with many invalid due to incorrect matches.
Despite the challenges of obtaining the grant, once approved, many beneficiaries faced difficulties collecting their payments at post offices, leading to long queues and even bribery. The grant was later extended multiple times, reinstated as a basic income grant in 2021, and faced technical hurdles when the state of disaster ended. New applicants had to reapply, and a monthly bank-account means test was introduced, disqualifying those receiving R350 or more per month.
The researchers, from the University of Cape Town's Development Policy Research Unit, studied the grant's impact on employment and job-seeking using survey data from 2021 and 2022. They found that receiving the grant increased the likelihood of people looking for work by 3.4 percentage points and the probability of attempting to start a business by 1.5 percentage points. Consequently, this led to a 2.2 percentage point increase in the probability of employment.
The effect on employment was most pronounced during the first three months after beneficiaries started receiving the grant, where their chances of finding work increased by 2.6 percentage points. However, after seven to nine months, no clear impact on employment could be detected.
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