Lamb for 12 on $400 Monthly Shows South Africa Welfare Addiction

Sprawled on a faded black two-seater couch covered with cigarette burns, Eva Matthys, 72, is instructing her 13-year-old granddaughter on how to cook minced lamb -- for 12. That’s how many family members share the government-subsidized house in Brandvlei, a town in South Africa’s Northern Cape province. Side dishes: macaroni and bolognese sauce. What pays for the meal: South Africa’s taxpayers, via 4,540 rand ($418) in monthly government benefits. Nine of the residents in the house, from Matthys’s baby great-granddaughter to Hendrik, her husband, receive one kind of aid or another. Only one of the 12 works. 

Welfare dependency, a problem across the developed world, has reached a danger level in South Africa. More people receive aid than have jobs, and the ratio has been worsening for five years. While the handouts have helped address abject poverty since the end of the apartheid regime, they haven’t helped recipients get skills needed for jobs in a country with 24 percent unemployment.

“The state gives the money, why would we doubt applying for it?” Matthys asked as she arranged the hem of her pink floral skirt over her swollen legs. “Just think how I would have gotten by with all of these children. The government looks after them.”

Photographer: Rene Vollgraaff/Bloomberg

Eva Matthys sits in front of her government-subsidized house, with granddaughters,... Read More

Over three days following the lives of those in the Matthys house, two young family members expressed the unhappy truth: They need the payments to survive -- yet they would look harder for jobs if they had no such income. From matriarch Matthys -- who berates her offspring for not seeking work -- to 20-month-old Corlea, the family shows how almost impossible it is to unhook from the state.

Benefits Spending

Dependence on welfare has soared since South Africa’s first multiracial vote in 1994. At 13 percent of gross domestic product, spending on social programs including health but not education is less than the developed-world average, calculated by the Organization for Economic Cooperation and Development at 22 percent. Still, it exceeds that of Mexico, which spends 7.4 percent, and South Korea, at 9.3 percent. The new South African budget will be released tomorrow.

“Despite the impact in lifting households out of poverty, so extensive a social grant system in a society where unemployment has doubled since 1994 puts strain on the country’s tax base,” said Lerato Moloi, acting head of research at the South African Institute of Race Relations. “If this trend continues, South Africa’s tax base will not grow fast enough to keep supporting the millions of vulnerable individuals who rely on monthly cash transfers from the state.”

Photographer: Andrew Aitchison/In Pictures/Corbis

A South African woman hangs her family's laundry on a make-shift washing line between... Read More

Skills Dearth

The concern is not just about supporting the growing number of beneficiaries. South Africa, a nation that this year celebrates the 20th anniversary of its first democratic election after apartheid, also is struggling with a skills gap that forces manufacturers to seek high-level workers from abroad. Unlike in Brazil, whose Bolsa Familia program is celebrated as a model of alleviating poverty, South Africa’s recipients don’t have to meet educational or preventive-health conditions.

“The social grants are not sustainable,” said Lullu Krugel, an economist at KPMG LLP in Johannesburg. “The intention behind it is good, but because we are not creating jobs fast enough, the intention is not realized. The whole idea should be that you should capture people in that net for a while until they are able to move and stand on their own feet.”

Brandvlei is a town of about 5,000 people, located about 600 kilometers (373 miles) north of Cape Town. Jobs are scarce. The largest employers are the local municipality, a salt-producing company and about 50 farms in the region that use low-skilled workers at minimum wage.

Speaking Afrikaans

Unemployment there is estimated by the local welfare office at 90 percent. Most of Brandvlei’s townsfolk, including the Matthys family, are Colored, a term coined by the apartheid government to refer to those of mixed race or people descended from the indigenous Khoisan. Their principal language is Afrikaans, spoken by a quarter of South Africans.

On an overcast day just after the monthly welfare payout, Brandvlei’s main street, one of only three tarred roads in town, was abuzz with activity. Five women, two with babies on their hips, stood at an automated teller machine run by First National Bank to withdraw the grants that had been deposited in their accounts the day before.

At the KLK general and agricultural dealer across the street, farmers and welfare recipients lined up together to buy groceries for the month. Three buildings to the right, people crowded at the door of Brandvlei Financial Services to pay the previous month’s debts.

Survival Only

The roughly 600 social grants paid out every month keep the town running, said Sybrand de Beer, who has been the principal of Brandvlei Primary School for 23 years. The parents of more than half of the 280 children in De Beer’s school receive social grants for their children, he said, in addition to such other programs as school lunches available for youth.

“If the grants go, the town will go. It keeps the town running,” he said. “But the grant only helps people to survive. It does not make their lives better.”

There’s little danger of the grants going away. On the contrary, welfare is being expanded. The national budget allocated 133 billion rand, or 12 percent of total expenditure, toward social protection for the year through March 2014, and the government expects spending to rise by 7.3 percent for each of the next three fiscal years. This is the same amount allocated for health services.

Means Test

The child grants, the most extensive of the government’s welfare payments, have been expanded to cover close to 11.7 million children up to age 18 since being introduced in 1998. Eligibility for the child grant is decided according to a means test. There is no means test for the foster care grant and a means test for the old-age grant is to be phased out.

In all, 16.5 million people receive government benefits, compared with 15.2 million working as of the fourth quarter of 2013. Those on assistance make up 30 percent of the total population, compared with 25 percent of Brazilians who are on that country’s social welfare program.

Although spending on welfare grants is growing faster than inflation, President Jacob Zuma says the welfare system can be maintained. Ahead of the May 7 national election, his ruling African National Congress highlights the expansion over the past 20 years as one of its biggest success stories.

 

“The grants are the most effective poverty alleviation mechanism in our process of addressing the legacy of apartheid,” Zuma said in parliament on Feb. 20. “When we deal with the issue of social grants, it’s not because we are saying this country is going to live on these. We are dealing with a problem that there is no other way you can deal with it, to help those who have absolutely nothing to have something to eat on the table.” 

READ ENTIRE ARTICLE HERE: http://www.bloomberg.com/news/2014-02-24/lamb-for-12-on-400-monthly-shows-south-africa-welfare-addiction.html

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