Theme: Fiscal policy / social expenditure
Responsible: National Treasury / Department of Social Development / DPSA / DSBD
Q4 2025 QLFS: official unemployment rate 31.4% (narrow definition, unchanged from Q3 2025); youth unemployment (15–34) at 58.5%; expanded unemployment rate (including discouraged workers) approximately 42.5%. Labour force participation rate: 56.3%. The end of load-shedding has supported services sector employment recovery, but manufacturing employment continues to contract — partly reflecting the automotive export shock (US tariffs), CTFL import competition, and ongoing capital deepening in mining. The SRD grant (R370/month) covers approximately 9.3 million beneficiaries and represents a de facto basic income floor, but is not linked to work-seeking or skills development activities. The Inclusive Growth Spending Review should prioritise: expansion of the Employment Tax Incentive (ETI) for youth workers, the Jobs Fund's fourth investment round, EPWP reform toward skills-pathway integration, and SMME employer de-registration cost reduction.
Who backs this reform, who needs convincing, and which interests or red lines shape political feasibility.
Backers
0
0 stakeholders
Negotiation weight
9
1 conditional actors
Opposition weight
9
1 opposing actors
Review coverage
0/2
All mapped stance notes are still draft
Provenance warning
Every mapped stakeholder stance for this idea is still draft. The coalition score is directional only until at least the high-influence actors are reviewed.
Coalition Read
Highest-leverage swing actor: National Treasury. Most serious blocker: COSATU.
Political Tractability
No reviewed signals · 0% of mapped influence has been reviewed.
Treasury supports expenditure reprioritisation but is cautious about political feasibility of redirecting grants toward employment programmes.
Interest: Fiscal consolidation with public debt stabilising below 75% of GDP; structural reforms that improve revenue without expanding contingent liabilities;…
Concern: Unfunded mandates in energy transition (JETP co-financing); Eskom's R400bn+ debt and how restructuring socialises costs; reform proposals that create…
Engagement path: Reforms must be fiscally neutral or revenue-positive over the MTEF window; SOE restructuring must demonstrably reduce contingent liabilities; credible…
COSATU opposes redirecting social grants toward employment programmes, viewing grants as a constitutional safety net.
Interest: Worker protections under the Labour Relations Act and Basic Conditions of Employment Act; collective bargaining rights; equitable wage growth; just tr…
Concern: Labour market flexibility reforms that erode LRA and BCEA protections; Eskom unbundling without adequate just transition planning for NUM members; pri…
Engagement path: Meaningful social dialogue through NEDLAC before structural reforms are finalised; just transition funding ring-fenced in MTEF; skills retraining and…
South Africa spends approximately R280 billion annually on social grants (2025/26), including the Social Relief of Distress (SRD) grant (R110 per day for 9 million recipients), child support grants (R530 per month for 13 million children), old age pensions, and disability grants. The fiscal cost of the SRD grant alone—introduced as a COVID-19 measure in 2020 and retained due to mass unemployment—is R35 billion per year. The Inclusive Growth Spending Review, proposed in the 2024 Budget and commissioned within the Medium-Term Expenditure Framework process, evaluates whether the social protection budget is optimally structured to simultaneously reduce poverty (short-term) and unemployment (long-term). Specifically: could a portion of the SRD grant budget be redirected to employment programmes (EPWP, Jobs Fund) without leaving vulnerable people worse off? The evidence from international social protection research suggests that conditionality (linking grants to training or job search) works in countries with functioning labour markets but has negligible effects in high-unemployment contexts. The textbook (Chapter 8) notes that South Africa's grant system is fiscally large, well-targeted, and poverty-reducing but has no direct channel to labour market activation. The MTBPS 2025 commits to resolving the SRD grant's legal status by 2026/27.
Referenced in OECD Economic Surveys: South Africa
OECD SA Survey (2017, 2020, 2022, 2025). Building an inclusive social protection system is a key recommendation in the 2020 survey.
Grants keep people alive — employment programmes give them a future. Both matter, but the balance has shifted too far from investment toward consumption. — PEAC Policy Note 2024
National Treasury, working through the MTEF process, will commission a comprehensive Inclusive Growth Spending Review evaluating whether the R280 billion social protection budget is optimally structured for both poverty reduction and employment activation. The review will model trade-offs between the SRD grant, EPWP, and the Jobs Fund. DPME will lead programme evaluation using administrative data from SASSA and the UIF. The SRD grant's legal status will be resolved by 2026/27 MTBPS as committed. Success is measured by a published spending review with evidence-based policy recommendations adopted in the 2027 Budget.
National Treasury and DPME commission the Inclusive Growth Spending Review: define scope (social grants, EPWP, Jobs Fund, youth employment interventions), appoint technical review team, establish data access protocols with SASSA and UIF
SASSA and DSD publish consolidated administrative data on SRD grant recipient characteristics, labour market status, and grant utilisation patterns; link to SARS taxpayer register for income verification and Jobs Fund outcome data
Spending Review technical report: model three scenarios for social protection budget reorientation (maintain status quo, partial employment activation, full basic income grant); publish for stakeholder consultation
Brazil's Bolsa Família (2003) reached 14 million families (50 million people) at peak, transferring BRL 190/month conditional on children attending school and health check-ups. Poverty fell from 22% to 7% between 2003 and 2014; 29 million people exited extreme poverty. Payments were made via Caixa Econômica Federal bank cards, bringing 10 million unbanked families into the formal financial system. SA's 18-million-recipient social grants system uses a similar architecture; Bolsa Família demonstrates the power of conditionality and financial inclusion linkages within grant programmes.
Rwanda rebuilt state capacity after 1994 through merit-based senior civil service recruitment and Imihigo performance contracts for ministers and district leaders linked to quarterly presidential reviews. Rwanda rose from one of the world's most fragile states to 38th on Doing Business (2020). GDP per capita grew from USD 225 (2000) to USD 822 (2020); business registration fell to 4 hours. Corruption Perceptions Index rank: 49th globally (2023), better than SA at 83rd. SA's performance management system (DPME, MPAT) exists but lacks consequences for non-performance — Rwanda's key institutional difference.
Approach
Rwanda rebuilt state capacity after 1994 through a combination of: merit-based senior civil service recruitment (English-French-Kinyarwanda requirements), performance contracts (Imihigo) for ministers and district leaders linked to quarterly dashboards, and a strong anti-corruption framework (Office of the Ombudsman with asset disclosure). The President personally reviewed district performance scorecards quarterly. Cabinet reshuffles followed non-performance signals.
Anti-Extortion and Construction Mafia Task Force
National Treasury PPP Unit and Infrastructure Financing Reform
Fiscal Consolidation and Debt Stabilisation
SAPS Detective Service Capacity and Case Clearance
NPA Prosecution Capacity and Independence
SARS Capacity Expansion and Revenue Recovery
How to cite
Wilse-Samson, L. (2026). Inclusive Growth Spending Review — Reprioritising Social Grants vs. Employment. SA Policy Space. NYU Wagner School of Public Policy. Retrieved 11 May 2026, from https://sa-policy-space.vercel.app/ideas/inclusive-growth-spending-review-reprioritising-social-grants-vs-employment?snapshot=2026-05-11
Data as of 2026-05-11 · latest PMG meeting 2026-05-08
Resolve SRD grant legal framework by 2026/27 MTBPS: Cabinet decision on whether to retain as permanent means-tested grant, convert to employment-linked support, or phase toward basic income grant; embody in Social Assistance Act amendment or annual Appropriations
12 months for spending review (2025); SRD legal framework resolution: MTBPS 2026; Budget reorientation: 2027 forward
No direct fiscal cost for review process (National Treasury operational budget); potential fiscal reorientation of R5-15 billion within existing social protection envelope, not new expenditure
Social Assistance Act (13 of 2004) amendment may be required to formalise SRD grant or convert to permanent means-tested structure; the spending review itself requires no new spending authority
Complex political economy. ANC social development caucus supports a basic income grant; DA supports time-limited means-tested grants with employment linkages; EFF supports unconditional BIG. GNU dynamics require negotiated consensus. Evidence from the spending review is critical to building a cross-party coalition for a workable reform.
Brazil's Bolsa Familia combined cash transfers with education and health conditionalities, reducing poverty while building human capital - success required well-functioning complementary services. Mexico's Programa Prospera evaluation (Parker and Todd 2017) found conditional transfers effective in reducing school dropout but insufficient alone to overcome labour market barriers in high-unemployment regions, directly relevant to SA's context.
Timeline: Institutional frameworks established in 5 years; measurable improvements visible by 2010
Lessons for South Africa
SA's performance management system (DPME, MPAT) exists but lacks consequences for non-performance. The Rwanda model is relevant to SA's DPSA professionalisation agenda — particularly the Imihigo-style performance contracts with quarterly scorecard review. The key difference is political will: Rwanda's system worked because failure led to consequences. SA's framework produces dashboards that are rarely acted upon. The National Development Plan Coordination Commission is structurally similar to Rwanda's delivery units but needs consequence management authority.