Analyse the impact that the increasing number of social grants may have on:
The unemployment rate
Answers
Social grants are given in a developing economy for the welfare of the small, backward and marginal groups. The positive impacts of such social grants are-
1) Social grants in form of food subsidy, LPG subsidy, cash grant help the poor come out of their poverty and help them sustain basic life requirements.
2) With basic requirement of food is fulfilled, a person can think to go out and work and earn money, and hence leads to the development of his/her family. This leads to more employment and reduces the employment rates.
3) Free education grant , especially for poor children enable them to get educated and work to earn money. Hence, unemployment is reduced.
The negative effects of social grants on unemployment -
1) Free food and fuel, can actually increase unemployment in some cases. This is because free food and fuel fulfill the survival requirements of a family.
2) When people get subsidy, they may not use it constructively and waste that money, thus bring the effect of social grant to nil.
3) Such grants inculcate the habit of sitting and eating at home, and does not force a person to work.