The Social Relief of Distress (SRD) grant is recognised as a vital support mechanism for millions of unemployed people living in South Africa. However, questions have been raised about the effectiveness of the grant in impacting employment.
Professor Haroon Bohrat, a member of the Presidential Economic Advisory Council, has raised concerns about the SRD grants truly contributing to job creation in South Africa.
Earlier this year, Bohrat, along with Timothy Köhler published research that indicated that individuals who received the grant were more likely to seek employment by 25 percentage points in comparison to non-beneficiaries of the SRD grant.
However, the impact on job search was minimal according to Bohrat. As subsequent quarters passed, there was no significant influence on employment outcomes or business creation.
One model even indicated that the probability of finding a job even decreased.
What we find is as you go through the quarters and the SRD [grant] is continuously sort of allocated to recipients it has no significant impact on employment outcomes or on starting a business. In fact, in one of the model specifications, reduces the probability of finding a job
Bohrat says if the SRD is going to be implemented going forward, questions must be asked about what it is the government is trying to solve. This SRD grant may not be the correct instrument if the government is trying to boost job creation or enable entrepreneurship.
While the SRD grant may be effective in assisting the government with poverty alleviation and food security, other options such as school feeding schemes or enhancing existing social rights programs should also be considered.
If you're trying to solve poverty and inequality in society well then you should have a proper discussion about what the best instruments are. Is supporting the unemployed and those in the informal sector necessarily the best instrument?
Bohrat emphasises the importance of active labour market policies, such as job search support and training programs, to increase employment opportunities. He also stresses the significance of expanding the informal sector and allowing individuals in urban areas to operate legally and independently.
