ABSTRACT
The COVID-19 pandemic and associated lockdown responses revealed structural inequalities in the South African economy and subjected already-vulnerable households to large negative and unexpected economic shocks. South Africa’s well-developed cash transfer and social insurance systems facilitated swift and substantial interventions to ensure that economically vulnerable households were able to survive the economic impacts of the pandemic. The interventions were in the forms of existing grant top-ups, temporary relief to employers and employees, and a new special social relief of distress (SRD) grant aimed at the previously excluded unemployed population. We find that these interventions were relatively well targeted, although we do find some evidence of non-poor households also benefiting from grants intended for the poor. Nevertheless, the temporary extension of the social assistance net to unemployed individuals assisted many vulnerable households in staving off the worst of the economic impacts of the pandemic. However, given South Africa’s fragile fiscal outlook, it is important that the continuation of additional support to unemployed individuals works in tandem with focused labour market interventions to ensure that South Africa achieves its employment, economic growth and longer-term fiscal sustainability objectives.
