Report

2015-05-28

University of Cape Town

Globally and locally, youth unemployment is on the rise, leading the ILO to warn of a “‘scarred’generation of young people” who face low rates of employment and high rates of inactivity (ILO 2013). Policymakers and researchers are exploring ways to address the issue; within the South African context, increasing attention is being paid to social grants and their role in South Africa’s labour market. A controversial subject, grants are often criticised for weakening incentives to work and encouraging welfare dependency. An alternative view is that they have long-term benefits for human capital investment and can facilitate job search and labour migration. Research conducted by SALDRU in rural KwaZulu-Natal and metropolitan Cape Town finds no evidence that the arrival of the state old-age pension, a key social grant in South Africa, has negative labour supply effects. On the contrary, in rural areas it is found to assist unemployed men migrate and find work, provided that job-seekers have completed their high school education.