Assessing the effectiveness of SA’s Presidential Employment Stimulus

New research indicates that South Africa's Presidential Employment Stimulus (PES) program is making a positive impact on the economy, particularly in addressing the high unemployment rate among young people in the country. The research, conducted by independent academic researchers Joshua Budlender and Yves Saint-Bazir of the University of Cape Town, highlights the effectiveness of the program in creating job opportunities and providing livelihood support for young individuals. The study was commissioned by the presidency and funded by the French Development Agency, which is backed by the European Union. The study focused on assessing the economic effects of public employment through the PES program. The researchers found that when young people are employed through the program, they not only benefit directly but also contribute to stimulating economic activity in other sectors. The findings suggest that public employment, as well as social grants, can have positive ripple effects on the broader economy, potentially encouraging private sector employment and income growth. One of the key components of the PES program is the Basic Education Employment Initiative, which has employed a significant number of young people as teaching assistants, school assistants, or general assistants. This initiative alone has created job opportunities for over 850,000 young individuals for five to ten months at a time. Additionally, other sectors like environmental management and support for early childhood development centers and artists have also benefited from the program. The total budget allocated to the PES program amounts to 42 billion rand, underscoring the scale of the initiative and its impact on job creation and livelihood support. The success of the program is further evidenced by improvements in test scores among students, thanks to the interventions in the education sector. While the PES program offers temporary employment opportunities, the research indicates that it has a lasting impact on participants' spending behavior. The study revealed a 15% increase in spending at retail stores during the program, with a continued 4-5% increase even after the employment period ends. This sustained spending could be attributed to individuals transitioning to private sector jobs or engaging in savings activities. Moreover, the research highlights an indirect positive effect on wages as a result of the PES program. By analyzing the spending patterns of program participants, the study estimated that the program generates around $50 million per month in value added in the broader economy, with approximately $19 million contributing to increased wages and employment in various sectors. This demonstrates how public employment initiatives can stimulate economic activity and support job creation beyond the initial program duration. In conclusion, the study underscores the importance of initiatives like the Presidential Employment Stimulus program in addressing unemployment challenges and promoting economic growth in South Africa. The positive outcomes observed in the research emphasize the potential of such programs to create a ripple effect that benefits not only the participants but also the wider economy. Moving forward, further evaluation and research will be essential in assessing the long-term impacts and sustainability of the program.