Special government cash transfers to households in order to help them through the lockdown have had three components:
This brief summarizes available information on disbursement of these grants.
Table 1 sets out the monthly augmentation of social grants, along with grants made in April and July (the last month for which statistics have been published:
Grant |
Augmentation |
April recipients |
July recipients |
Child support (per child, first month) |
R 300 |
12 777 926 |
12 857 228 |
Child support (per caregiver, later months) |
R 500 |
7 167 022 |
|
Old age |
R 250 |
3 666 558 |
3 702 918 |
Disability |
R 250 |
1 033 243 |
1 039 567 |
Foster care |
R 250 |
355 127 |
347 642 |
Care dependency |
R 250 |
154 451 |
157 172 |
Sources: National Treasury, Supplementary Budget Review, 2020 and Department of Social Development
The monthly cost of these augmentations given the number of recipients in July is R 4.9 billion. The augmentation is payable from April to October 2020. The 2020/21 expenditure over the six month period (May to October)[1] for which is estimated at R 29.4 billion, assuming that the July grant recipients represent an average over the six month period.
Table 2 sets out approved applications for the social relief of distress grant from May to August, with projection of costs until January 2021
Month |
Approvals |
May |
4 424 715 |
June |
5 061 919 |
July |
5 572 479 |
August |
5 981 784 |
Total May-August |
21 020 877 |
Cost May - August |
R 7.4 billion |
Cost September - October |
R 4.2 billion |
Cost November - January |
R 6.3 billion |
Source: Department of Social Development presentation to the National Assembly’s Social Development Portfolio Committee, 14 October 2020
The grant was originally intended to run from May to October, costing an estimated R 11.6 billion. To this must be added the augmentation of social grants, to get a total estimated expenditure to the end of October of R 41.0 billion, compared with a budgeted expenditure of R 40.9 billion allocated in the June supplementary budget. However, the President announced a three month extension of the grant in his speech to Parliament on 14 October, at an estimated cost of R 6.3 billion which will require an additional supplementation in the second adjustment budget.
In a media statement on 30 September, the UIF announced that it had so far disbursed R 45.2 billion. This covers the period from the start of the lockdown until 15 August. TERS was initially intended to run for three months, but it has been extended until 15 October. BL Premium reported on 18 October that
the National Economic Development and Labour Council was considering extending the scheme until 15 November, after the state of disaster was extended for another month.
There are three main problems with TERS:
By way of conclusion, a back of the envelope calculation is presented to compare the increase in state disbursements to households with the drop in compensation of employees in the national accounts in the second quarter.
Social grant augmentation: 3 x R 4.9 billion = R 14.7 billion
Social relief of distress grant: Half of R 7.4 billion = R 3.7 billion
TERS: Two thirds of R 45.2 billion = R 30.1 billion
TOTAL R 48.5 billion
First quarter compensation R 593.3 billion
Second quarter compensation R 556.6 billion
Drop R 36.7 billion
Source: Statistics South Africa, Excel table GDP P0441-2020Q2, accompanying Statistics South Africa, Gross Domestic Product, Second Quarter 2020, Statistical Release P0441, 8 September 2020
There are caveats:
All said and done, income support in Q2 seems to have been substantial in relation to need. Given the rebound in the economy, the relationship should be better, since there will have been little or no slackening in income support, while compensation of employees will have increased again.
Charles Simkins
Head of Research
charles@hsf.org.za
[1] April social grants were financed from 2019/20 expenditure
[2] See the Auditor-General’s PowerPoint presentation to the National Assembly’s Portfolio Committee on Employment and Labour on 4 October 2020
[3] See Charles Simkins, August production estimates and April to June Quarterly Employment Statistics, HSF Brief, 20 October 2020