Millions of South African grant recipients have jobs or small businesses

Millions of grant beneficiaries in South Africa have jobs with no written contract or a business not registered for tax, which may help to understand the debate around the official unemployment figures.

The debate started after former Capitec CEO Gerrie Fourie said that South Africa’s official unemployment rate is much lower than the numbers suggest.

He said the actual unemployment rate, which Stats SA reports at 33%, may be closer to 10%, based on observations of informal economic activity.

Capitec has over 24 million clients, many of whom are low-income earners in townships. This data gives the bank great insight into the economic activity in the informal sector.

Fourie argued that South Africa’s unemployment rate should be much lower, as it does not account for South Africans who have businesses in the informal market.

Capitec is working hard to target this sector through its business, which it calls the ‘emerging market’, through its business banking services.

Fourie explained that these businesses operate similarly to companies in the formal market but are overlooked by data collectors like StatsSA when compiling the country’s employment data.

South Africa’s foremost expert on the informal market, GG Alcock, backed Fourie’s views on South Africa’s true unemployment rate.

Alcock has conducted extensive research into South Africa’s informal market and the businesses operating within this segment.

He said South Africa’s unemployment rate would be far lower if all the owners and employees of informal businesses were included in the official statistics.

According to Alcock’s research, South Africa’s real unemployment rate is closer to 12% to 15%, much lower than StatsSA’s 33%.

This mismatch is attributable to Stats SA’s approach to unemployment statistics, as the organisation seeks to measure unemployment, rather than employment.

He proposed that, if South Africa truly wants to measure the number of people employed in the country, Stats SA should introduce a new definition for informal employment in its statistics.

Stats SA responds

The head of South Africa’s statistics agency, Statistician General Risenga Maluleke, defended StatsSA’s methodology.

He said it was incorrect and misleading to suggest that Statistics South Africa misses those employed in the informal sector.

The organisation measures casual workers using International Labour Organisation guidelines on registration status and the sizes of businesses.

To qualify, employees must be unregistered for income tax and work in places that employ fewer than five people.

It also produces reports that measure this sector, including the quarterly labour-force survey and the survey of employers and self-employed.

“The informal sector is measured, tracked and reported on consistently, and the insights these reports provide should guide and enrich policy, not distort it,” Maluleke said.

“We urge industry leaders to engage more deeply with official statistics before questioning their validity. While constructive debate is encouraged, it should be based on solid evidence.”

The battle regarding South Africa’s unemployment data ended peacefully after discussions between StatsSA and Fourie.

Stats SA is changing the questionnaire it uses to collect the country’s employment data, with significant shifts expected in data related to the informal sector.

On Thursday, 7 August 2025, Stats SA said it was implementing an updated Quarterly Labour Force questionnaire based on the latest international standards.

The agency said this new questionnaire will improve the depiction of South Africa’s labour market and the world of work.

These changes were piloted by StatsSA in 2024 and will be implemented from the third quarter of 2025.

Stats SA believes the additional indicators will lead to a more comprehensive and detailed understanding of participation in paid and unpaid work and labour underutilisation.

Millions of South African grant recipients have informal jobs or small businesses

One of the biggest questions about a much lower unemployment figure is the high number of grant recipients in South Africa.

In February 2025, President Cyril Ramaphosa said that more than 28 million people receive monthly social grant payments.

“More than 28 million unemployed and vulnerable people in our country receive social assistance,” Ramaphosa said in his State of the Nation Address (SONA).

If South Africa’s accurate unemployment figure is as low as 10%, and there are 28 million grant recipients, this suggests that many grant recipients have jobs.

This is indeed what many experts, including GG Alcock and researchers from the University of Johannesburg, found.

South Africa has one of the world’s most expansive social grant system: 47% of the population relies on a monthly grant.

Of these, 18 million are permanent beneficiaries and about 10 million receive a temporary Social Relief of Distress Grant.

Alcock said grant recipients actively engage in informal income-generating activities such as trading, renting out space, services, and crafts.

Research by the University of Johannesburg showed that 31% of grant beneficiaries in South Africa have jobs with no written contract or a business not registered for tax.

The grant recipients make more money through activities like care work, informal trading, services, or self-employment.

Grant beneficiaries showed a strong desire to be productive, such as having a job, or starting their own business and finding ways to improve income and personal and family well-being.