COVID-19, social protection, and the labour market in South Africa: Are social grants being targeted at the most vulnerable?

In light of the South African government’s pandemic-induced expansion of the country’s social protection system to provide relief to vulnerable individuals and households, this paper aims to use newly available, nationally representative survey data – Wave 1 of the NIDS-CRAM – to provide a quantitative, descriptive evaluation of whether social grants are being successfully targeted at the most vulnerable in the context of the national lockdown and COVID-19 crisis. In particular, we highlight heterogeneity in labour market outcomes before and during the national lockdown to show that social grants are an important source of income relief for individuals in low-income households. We show that these individuals have been disproportionately burdened by adverse labour market effects induced by the lockdown with respect to employment loss, the likelihood of having a paid job to return to, and reductions in working hours and earnings. We show that grants substantially increase the incomes of poor households in relative terms and, through fiscal incidence analysis, we show that the pandemic-induced additional government spending on grants have been pro-poor, especially that on the Child Support Grant. Considering the observed heterogeneity in labour market outcomes before and during lockdown across the household income distribution and that grants are relatively well-targeted; we conclude with a set of policy recommendations for South Africa’s social protection system going forward. Acknowledgements This research has been published as a National Income Dynamics Study (NIDS) – Coronavirus Rapid Mobile Survey (CRAM) policy paper (#6, 15 July 2020). For further information please see www.cramsurvey.org.

Working Papers can be downloaded in PDF (Adobe Acrobat) format from www.dpru.uct.ac.za. A limited number of printed copies are available from the Communications Manager: DPRU, University of Cape Town, Private Bag X3, Rondebosch, Cape Town, 7700, South Africa. Tel: +27 (0)21 650 5701, email: sarah.marriott@uct.ac.za. Corresponding author Tim Köhler (Junior Researcher and PhD candidate, Development Policy Research Unit, School of Economics, Faculty of Commerce, University of Cape Town) email: tim.kohler@uct.ac.za Recommended citation Köhler, T. and Bhorat, H. (2020). COVID-19, social protection, and the labour market in South Africa: Are social grants being targeted at the most vulnerable?. Development Policy Research Unit Working