A supply-side alternative for SRD grants in South Africa

Abstract

During a lively debate between Haroon Bhorat and Michael Sachs at the University of Pretoria recently, Bhorat pleaded for supply-side measures to alleviate poverty in South Africa, rather than demand-side measures. (The debate took place during a session at the Faculty of Economic and Management Sciences' Inaugural Research Day on 8 September, 2023).Bhorat claimed that the SRD grants could not secure a solution to unemployment in a sustainable manner. In this paper, we use the UPGEM Computable General Equilibrium (CGE) model of the University of Pretoria to test the performance of wage subsidies in South Africa, in comparison to the Social Relief of Distress (SRD) grants of the same expenditure magnitude, and report on the differences between the two policy measures in terms of (i) unemployment alleviation, (ii) poverty alleviation and (iii) economic impact in general.