Social Grants as a Tool for Poverty Reduction in South Africa? A Longitudinal Analysis Using the NIDS Survey

by Odile Mackett 

Abstract

South Africa is challenged by poverty and unemployment, as is characteristic of many developing countries. For those who cannot engage in wage labour, the government has a social assistance (grants) program which provides cash transfers for children, pensioners, and persons with disabilities. However, with persistently high unemployment rates and scarcity of jobs, the household structures of some grant recipients are often affected in an attempt to accommodate unemployed individuals who do not qualify for government assistance. The purpose of this research was to study the difference in labour market and poverty outcomes of individuals in grant receiving and non-grant receiving households. Using the National Income Dynamics Study (NIDS), this research found that individuals in grant receiving households have less favourable labour market outcomes than those in non-grant receiving households. Furthermore, individuals living in a household with an old-age pension recipient had better labour market and poverty outcomes compared to those living with a child support grant recipient. This suggests that the characteristics of households with old-age pension recipients may be more conducive to labour market and poverty outcomes over time compared to other households. Not only do the recipients of this grant receive a greater nominal amount of grant income each month, compared to child support grant recipients, but having pensioners in the household also provides the potential for working-age adults to benefit from ‘free’ childcare.

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Odile Mackett is a lecturer in the School of Governance at the University of the Witwatersrand (Johannesburg, South Africa) and a PHD candidate on the Joint ISS-Wits PHD programme. Her current research focuses on the relationship between women’s time-use in unpaid and paid labour. Further interests include poverty and inequality.