COVID-19 and the Counter-cyclical Role of the State in South Africa

Abstract

The COVID-19 pandemic has disrupted social and economic activities across the world, resulting in the contraction of national economies and the global economy, causing an unprecedented loss of employment. The pandemic’s detrimental impact has meant that governments have to play an interventionist role to mitigate the staggering social and economic effects of the COVID-19 lockdown on sustainable development. In light of the damaging impact of the pandemic on the economy, employment and poverty, this article assesses the socio-economic contribution and effectiveness of the counter-cyclical policies in mitigating the socio-economic impact of COVID-19 in South Africa. Methodologically, the article used secondary qualitative and quantitative data to assess the government’s fiscal and monetary measures. The findings suggest that South Africa adopted extensive counter-cyclical fiscal and monetary policies, such as increased government spending on social and economic public goods, tax relief, interest rate cuts and job protection measures. While these counter-cyclical measures had some degree of effectiveness, they were undermined by the lack of comprehensively targeted measures for low-income households. This article argues that the country needs to find proactive ways of managing its counter-cyclical fiscal measures to ensure a higher degree of effectiveness and economic stabilization to reach those in greatest need.

The impact of China’s financial policy on economic resilience during the pandemic period

“…The impact of the COVID-19 pandemic on the social economy is comprehensive, increasing the operational pressure on the banking industry, and comprehensively affecting the transmission of financial policies (Khambule 2021 ). The evaluation indicators of the pandemic situation are determined according to the data statistics method officially released by the National Health Commission and the analysis of Zhong Nanshan, a member of the School of Virology, Chinese Academy of Sciences.…”

Modelling the impact of the COVID-19 pandemic on South African livelihoods

“…It demonstrates South Africa's fiscal capacity and appetite to address the high levels of unemployment and poverty amid the socioeconomic effects of the pandemic. However, Khambule (2021) argues that the structures of South Africa's counter-cyclical policies failed to protect low-income households because of a lack of proactively targeted interventions.…”

“…The R500 bn (estimated to be 10% of the country’s GDP) focused on job creation and protection, income support (tax deferrals, holidays and extensions), wage protection through the UIF, social security support to the most vulnerable in society, a loan guarantee scheme, support to small businesses and municipalities) (The Presidency, 2020; Khambule, 2020). This reflects the adoption of expansionary fiscal policies targeted at protecting the economy and citizens through increased government spending to keep the economy afloat (Khambule, 2021). In addition to these measures, the South African government also received a further US$4 bn from the IMF and $1 bn from the New Development Bank (IMF, 2020b).…”

“…This paper interrogates the socioeconomic impact of the COVID-19 pandemic on South African livelihoods using data from the National Income Dynamics Study – Coronavirus Rapid Mobile Survey (NIDS-CRAM) Wave 1. Focusing on South Africa is significant because it has one of the highest rates of poverty, unemployment and inequalities in the world despite being the most industrialized economy in sub-Saharan Africa (Khambule, 2021). More so, South Africa is the most drastically affected country with COVID-19 infection, not only within the sub-Saharan African region but also in the continent as a whole.…”

Informalidad laboral: Un análisis integral de las causas y factores que perpetúan su existencia

“…Respecto a la informalidad laboral, Varela y Retamoza (2020) manifiestan que existen ciertos factores que lo determinan, como por ejemplo: la educación, desempleo, subempleo, el salario bajo y baja productividad. Ante esta afirmación Loayza (2016) establece que la informalidad laboral no está referida únicamente a personas, sino también a las empresas u otra actividad que está fuera de cualquier marco legal, el mismo donde participa, en cierta medida, el gobierno, siendo este último el que causa efectos negativos en los trabajadores, contribuyendo debido a las limitaciones a la informalidad (Khambule, 2021).…”