It has been 25 days since South Africa began a nation-wide lockdown to contain the spread of the coronavirus.
On Tuesday night, president Cyril Ramaphosa announced a new R500 billion economic support package, which introduces a monthly payout to the unemployed – the first of its kind in South Africa.
It will be temporary, and not the universal basic income grant many hoped for, but South Africa will now pay the unemployed a cash amount for six months.
The so-called Covid-19 Social Relief of Distress grant of R350 a month will be paid to individuals who are currently jobless and do not receive any other form of social grant or Unemployment Insurance Fund (UIF) payment.
The Department of Social Development will administer the payments, and Ramaphosa said it will soon announce how to apply for the new payout. It will be a massive undertaking, given that the country remains under lockdown and prospective recipients won’t be able to apply in person yet. The first payouts are due to next month.
Some ten million people could apply
More than a million people are expected to lose their jobs due to the impact of Covid-19, according to preliminary modelling by Business For South Africa, a corporate alliance founded four weeks ago in response to the pandemic. Some of these workers who were employed in the formal sector should receive unemployment payouts from the UIF, which covers ten million workers. But many will be in the informal sector, and not entitled to UIF payments.
Some could also be excluded because they are receiving other welfare grants – it’s not yet clear whether the unemployed recipients of welfare grants for their children will be entitled to the new payout.
Based on current and expected unemployment numbers, the total cost to the government could be between R14 billion (6.7 million recipients) and R23 billion (11 million).
In total, Ramaphosa said that government has budgeted R50 billion to relieve the coronavirus impact on the poor. Apart from the unemployment benefit, he announced that child support grant beneficiaries will receive an extra R300 in May and from June to October they will receive an additional R500 each month. All other grant beneficiaries will receive an extra R250 per month for the next six months.
There are almost 13 million beneficiaries of child support grants and almost 4 million South Africans who receive old-age pensions.
Unemployment benefit recipients will get around R11 a day
The monthly payment of R350 is exactly a tenth of the minimum wage (around R3,500).
It is also far below the amount of money you need to stay alive in South Africa, just when it comes to food. According to Statistics South Africa, the food poverty line is R561 per person per month. This refers to the amount of money that an individual needs to buy the “minimum required daily energy intake” of food. This is also commonly referred to as the “extreme” poverty line.
Here’s how SA’s cash payout compares to other countries
Like many other countries, South Africa has already introduced support initiatives to bolster the economy through lockdown and corona-induced economic paralysis.
South Africa has launched various tax breaks, as well as a special Covid-19 payout via the UIF.
Other countries have also introduced a cash payout, which South Africa has now also adopted – but at a far lower level.
In total, unemployed recipients will receive R2,100 over the course of six months.
Here’s how it compares to other Covid19 cash payouts across the world: