Social Development Minister Bathabile Dlamini announced that the child support grant would be expanded to include young people aged 19 to 23 years.
Ignoring this announcement for the moment, it is mostly because of the child support grant that over the past decade, the number of social grant beneficiaries has doubled since 2003 (up from 7.9 million to 15.8 million this year).
Our social assistance system is one of the largest in Africa, with spending on social grants accounting for 3% of the country’s gross domestic product. This expenditure is projected to rise from R118bn in 2013/14 to R145bn by 2016, as the number receiving assistance increases to 16.5 million.
The two largest grant programmes, constituting roughly 75% of total grant spending, is the child support grant and the old age grant.
With 52.98 million in the country (mid-2013 estimate by Statistics SA) and 15.8 million currently receiving social assistance, that equals 30%. But a welfare state is not defined by the percentage of people receiving social assistance; instead, it is defined by the state being committed to ensuring all its citizens enjoy a minimum standard of living.
Whether or not we are becoming a welfare state is a debate that will continue for some time (I believe) but regardless of this debate, I found something interesting last week.
New research suggests that “Untrustworthy individuals support generous welfare states because they expect to benefit without bearing the costs, whereas civic-minded individuals only support generous welfare states when surrounded by people they trust.” (Algan, Cahuc & Sangnier, 2014).
Further, the cross-country relationship between trust and the size of welfare states is twin-peaked due to these two opposing forces.
The implication of the above is that the research by Algan, Cahuc and Sangnier (2014) shows that “large welfare states can exist in societies populated by a majority of untrustworthy individuals who cheat on social benefits and taxes, and where the share of civic citizens is nonetheless large enough to raise a significant amount of taxes.
“If the civic spirit of public officials mirrors that of the population, these large welfare states will also be corrupt. Conversely, the welfare state can be both large and transparent, but only if the share of trustworthy individuals is very large.”
Rather than simply regurgitating the research further, please follow the link in the references and read the article for yourself (it is short and quite enlightening) and then consider the question below.
At the end of the day, perhaps like me you will find it interesting that our government (which is known for corruption) is pushing for an enlarged welfare state.
Which of the two options below sounds more like South Africa to you?
a) “large welfare states can exist in societies populated by a majority of untrustworthy individuals who cheat on social benefits and taxes, and where the share of civic citizens is nonetheless large enough to raise a significant amount of taxes”, or
b) “the welfare state can be both large and transparent, but only if the share of trustworthy individuals is very large.”
Algan, Y, Cahuc, P & M Sangnier. (2014). Trust and the welfare state: The twin-peaked curve.
* Geoffrey Chapman is a guest columnist and trade policy expert at the SABS. Views expressed are his own.
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