Half of your tax pays the ‘social wage’ 

R6 out of every R10 collected in tax and spent by the government is used to pay the ‘social wage’, which refers to expenditure on healthcare and education and, significantly, social grants. 

This was revealed by a director-general at the National Treasury, Duncan Pieterse, in the foreword to the Full Budget Review. 

“The budget allocates 6 of every 10 rands to the social wage – spending on health, education, social protection, community development and employment programmes,” Pieterse said. 

National Treasury said that just under 51% of consolidated spending will continue to be spent on the social wage. If one takes out interest payments on debt, the social wage takes up 60% of the national budget. 

National Treasury enhanced the social wage in the 2024 Budget, with R58 billion of the spending reductions announced in the 2023 Medium Term Budget Policy Statement being reversed. 

R251.3 billion was added to functions like health, education, peace and security and social development. 

This is mainly to provide for the carry-through costs of the 2023/24 public servant wage increase, the extension of the Covid-19 social relief of distress (SRD) grant and other social grant spending. 

Despite the increased expenditure on social services, the National Treasury urged departments to rationalise their programmes and evaluate their priorities to reduce spending. 

“Over the medium term, the National Treasury will continue to support the implementation of recommendations from the 2021 spending reviews, particularly proposals to close certain programmes or institutions as part of a broader government rationalisation process.”

To this end, the government has cut spending on economic development, community development, and general public services to afford significant increases in social grants, education, and healthcare. 

This is shown in the graph below. 

The largest parts of the social wage are education, healthcare, and social grants. More is spent on these three items than on economic development and policing. 

In his Budget Speech, Godongwana revealed that the government will spend R266.21 billion on social grants in the 2024/25 financial year – 3.6% of GDP.

This is a significant increase from the 2023/24 financial year when the government spent R250.97 billion.

In total, 27.78 million people received grants in 2023/24, expected to increase to 28.31 million this year. Over 9.2 million people will receive the SRD grant this year.

Grant beneficiaries – excluding Covid-19 SRD grant beneficiaries – are projected to increase from 18.8 million in 2023/24 to 19.7 million in 2026/27. 

Below is a breakdown of what makes up the social wage.