The Cost of Austerity: Who Pays the Price for South Africa’s Budget Delay?
As the government postpones its budget speech, South Africa’s most vulnerable communities brace for the impact of austerity—will the people or the economy come first?
2025: A Year of Shocks—Budget Increase, Protests, and No Budget. South Africa finds itself in unprecedented times as the national budget speech is postponed for the first time since Apartheid. This raises a critical question: who is not being heard?
The entire country is waiting for the newly proposed budget from the recently formed Government of National Unity (GNU). The government collectively decided to delay the budget speech until March 12th to resolve key disagreements, with the central point of contention being a proposed 2% increase in VAT.
As this news circulated in the media on Sunday, the country grappled with the economic and political failures of previous administrations. Students at UCT and Wits protested against the housing crisis and mounting financial debt, which threatened their ability to continue their studies. Meanwhile, unions rallied for the "People’s Budget" on Tuesday evening at St. George's Cathedral in a final attempt to convince Finance Minister Enoch Godongwana to prioritize health, education, and unemployed youth. The economy and finances were on everyone's mind, yet concerns were expressed differently across various groups.
At the People’s Budget, activists strongly opposed cuts to health, education, and basic services. Communities have borne the brunt of previous budget cuts, creating a world where privatization takes over and once again excludes vulnerable populations.
"We reject the idea that privatization prioritizes profits over people. We demand a society where resources are allocated to ensure housing, education, healthcare, and dignified documentation for all. Together, we proclaim: people before profits. Down with austerity, down!" declared Zwelinzima Vavi, General Secretary of the SA Federation of Trade Unions (Saftu).
Others called for the budget to be viewed as a tool for economic upliftment.
"The budget is not simply about numbers—it is a tool that can either uplift the majority or tighten the grip of the rich over our lives. For years, budgets have favored banks, investors, and profiteers, while workers and the poor are left with crumbs," said Abeeda Adams, General Industries Workers Union of SA Western Cape Secretary.
She further emphasized, "Mass unemployment, hunger, and a stagnant economy have become the daily reality of our people. While the government preaches about debt, over 10 million people go hungry every week."
This stark reality reveals a growing disconnect between the economy and the people. It exposes the existence of two South Africas: one that prioritizes economic management for the wealthy and another where the poor struggle to survive.
The DA was particularly vocal about ensuring that the budget reflects a path toward real improvement for ordinary South Africans.
"We've had two to three decades of promises of jobs and growth, but those things don’t materialize by simply wishing them into being. They require determined actions through medium-term development plans and budgets that align with those priorities," said DA leader John Steenhuisen.
He continued, "What we need to do is make big, bold decisions to move the country forward. That means reforms. We must be more assertive in stewarding the economy through these difficult times, leading it toward growth, prosperity, and opportunity."
The DA also recognized the harm that a VAT increase would inflict on vulnerable communities. According to PMBEJD data for January 2025, a worker earning the national minimum wage falls 46.4% short of what is required to purchase a basic monthly food basket for their family. A VAT increase would only widen this gap, making essential nutrition even more inaccessible.
"South Africa’s social grant system is already under strain. The child support grant is R530 per month—33% below the food poverty line of R796. Even before any VAT hike, the grant is insufficient to meet a child’s nutritional needs. A further VAT increase will deepen the shortfall, forcing families to make even harsher trade-offs between food, transport, education, and medical expenses," the DA warned.
It is evident that the newly proposed budget will leave many South Africans worse off. However, finding alternative sources of revenue also risks placing vulnerable communities in an equally dire position. The nation is left with a difficult choice: either endure budget cuts or accept an increase in VAT.
As we reflect on the moment and the so-called "saving of the South African economy," we must ask ourselves: who is not being seen and heard? Who wins and who loses when it comes to fiscal policy in South Africa?
Year after year, it is the youth, the unemployed, and marginalized communities who are left voiceless and without support in these dire circumstances. Will the newly proposed budget follow the same pattern, or will it bring about the meaningful change that South Africa so desperately needs? More importantly, it forces us to ask: what matters more—the people or the economy?
For now, we wait as the country struggles to find clarity and resolution in the ongoing political and economic battles. On March 12th, we will see whose voice truly matters.