South Africa is stretched thin: 70% unemployed among youth

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[This is about the State of the Nation. Under the rule of the Black Jew things are just getting worse. He's rather incompetent, even for a Black and despite all the Jewish backing from all the wealthy Globalist White Jews. It's wonderful watching all this implode. Jan]

High levels of joblessness have raised demand on the already strained fiscus, says Momentum Investments.

In the group’s latest reflection on the 2023 State of the Nation Address (SONA), Momentum said that South Africa’s overall budget is highly distributive in nature.

The government currently spends a substantial amount on free housing, utilities, education and health, and social grants.

South Africa’s social wage has neared 60% of non-interest spending and around 52% of consolidated government expenditure, said Momentum.

For example, the Social Relief Distress (SRD) grant was initially introduced in 2020 as a temporary measure to alleviate the severe consequences of the pandemic on households across the country.

However, Momentum said that the grant is now likely irreversible.

In last year’s medium-term budget in October 2022, Finance Minister Enoch Godongwana announced the extension of the SRD grant for another year ending March 2024. This came after the minister said that the grant itself was unsustainable, given the country’s books.

During President Cyril Ramaphosa’s late-night SONA on Thursday (9 February), he announced the further extension of the grant, with little detail regarding the timeline.

His speech intimated that the country’s National Treasury was now also considering urgent measures to mitigate the impact of load shedding on food prices. However, again, little clarity was given.

Analysts expect the SRD grant to form a permanent basic income grant applicable to vulnerable South Africans every month. However, Ramaphosa noted that work is underway to develop a ‘targetted basic income support’ which would be separate from the SRD.

According to Momentum, there remains contention over the amount the SRD grant should be adjusted to once the grant expires at the end of March 2024.

“The Insitute for Economic Justice calculated that a universal basic income grant would amount to between R275 billion and R355 billion per annum. The government’s social grant allocation for the fiscal year 2022/23 amounts to R250 billion,” said Momentum.

The group said that financing the grant remains a challenge in the context of the Treasury’s commitment to fiscal consolidation over the medium term, implying a more permanent tax adjustment or a decrease in other forms of social expenditure to protect the government’s purse.

Momentum suspects rating agencies are unlikely to react negatively to making the social grant permanent, given its ability to offer significant redistributive opportunities as long as it is introduced economically sustainably.

“The World Bank proved that the system in South Africa is particularly successful in reaching the poorest individuals, given the social assistance programmes in South Africa reduced the poverty gap by 31.9% relative to 26.7% for the typical upper-middle income country.”

According to Momentum, with real growth domestically averaging more than 1% in the past decade – employment opportunities have fallen short.

“The rate of unemployment has averaged 28% in the past decade and 30.3% in the last five years. On the expanded definition (which includes discouraging work seekers), the total number of unemployed persons has risen to 11.2 million,” said the group.

Source: https://businesstech.co.za/news/finance/663751/south-africa-is-stretched-thin/?utm_source=newsletter

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