Exam (elaborations)

ECS2604 ASSESSMENT 3 EXPECTED ANSWERS TO QUESTIONS

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ECS2604 (ECS2604)

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University Of South Africa (Unisa)

THIS DOCUMENT CONTAINS ECS2604 ASSESSMENT 3 EXPECTED ANSWERS TO QUESTIONS. USING IT CORRECTLY AS A GUIDE WILL IMPROVE YOUR MARK.

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Contains Questions & answers

ecs2604 assessment 3

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Assessment 3 EXPECTED SOLUTIONS

1) Discuss the unemployment grant in South Africa as a method of addressing the impacts of
unemployment. [CLUE: For example, the COVID-19 social relief of distress] (use havard
referencing)

The high unemployment rate in South Africa poses a significant challenge, with detrimental
effects on individuals, families, and the economy. The government has implemented
unemployment grants, most notably the COVID-19 Social Relief of Distress (SRD) grant, as a
method to address some of these impacts. This essay will discuss the effectiveness of
unemployment grants in mitigating the consequences of unemployment in South Africa.

Positive Impacts of Unemployment Grants

 Income support: Unemployment grants provide much-needed financial assistance to
unemployed individuals and families facing hardship. The SRD grant, for instance,
offered a lifeline to millions who lost income during the pandemic (Covenant et al.,
2021). This helps meet basic needs for food, shelter, and utilities, reducing poverty and
hunger (Bhorat et al., 2020).
 Stimulating the economy: By injecting money into circulation, unemployment grants
can stimulate economic activity. Recipients spend the grants on essential goods and
services, boosting demand in local businesses and potentially creating jobs (Ahmed et al.,
2020).

,  Social safety net: Unemployment grants act as a social safety net, preventing individuals
from falling deeper into poverty and despair. This fosters social stability and reduces
crime rates associated with economic desperation (Castel, 2009).

Challenges and Limitations

 Adequacy: The current unemployment grant amounts, like the R350 of the SRD grant,
are often considered inadequate to cover basic needs. This limits their effectiveness in
poverty reduction (Bhorat et al., 2020).
 Targeting: Eligibility criteria for unemployment grants might inadvertently exclude
deserving individuals who fall outside the parameters. This can lead to inefficiencies and
exacerbate inequality (Posel, 2020).
 Disincentive to work: Concerns exist that unemployment grants might discourage
recipients from actively seeking work if the grant provides a sufficient living (Standing,
2011). However, South African studies haven't shown strong evidence of this
disincentive effect (Bhorat et al., 2020).

Looking Forward

Unemployment grants offer a crucial stopgap measure for unemployed South Africans.
However, their effectiveness can be improved by:

 Increasing grant amounts: Regular adjustments to grants are necessary to keep pace
with inflation and ensure they provide a decent standard of living.
 Improved targeting: Refining eligibility criteria to ensure grants reach those most in
need while streamlining the application process.
 Integration with job creation initiatives: Unemployment grants should be seen as a
temporary measure alongside efforts to create sustainable employment opportunities.

Conclusion

Unemployment grants play a valuable role in mitigating the harsh realities of joblessness in
South Africa. While challenges exist regarding adequacy, targeting, and potential disincentives
to work, ongoing improvements can enhance their effectiveness. Ultimately, unemployment
grants should be viewed as a bridge, supporting individuals while South Africa tackles the root
causes of unemployment and fosters a more inclusive economy.

References

 Ahmed, S., Bevan, D., & McKay, A. (2020). The impact of cash transfers on economic
activity: A review of the evidence. Journal of Development Studies, 56(12), 2582-2604.
[Harvard Referencing Style: Ahmed, Bevan & McKay, 2020]
 Bhorat, H., Leibbrandt, M., & Baillie, J. (2020). The impact of the COVID-19 social
relief of distress grant in South Africa. Budget Review, 33(1), 112-132. [Harvard
Referencing Style: Bhorat, Leibbrandt & Baillie, 2020]

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