Budget 2026 Fails to Prioritise Youth, Social Protection and Real Economic Inclusion
The Budget Justice Coalition (BJC) notes with concern that the 2026 Budget fails to meaningfully prioritise the country’s most urgent crisis: mass youth unemployment and deepening social inequality and vulnerability. The framing of this budget as a historic “turning point” serves as an unambiguous declaration that this administration is not merely indifferent to the social crises, but is actively and deliberately aligned against the material interests of the working-class and the poor.
National Treasury has reiterated its commitment to fiscal consolidation and infrastructure-led growth, once again failing to demonstrate a clear shift toward labour-absorbing, inclusive social infrastructure and development. Instead, it continues a pattern of expenditure restraint in social sectors alongside optimistic projections of private investment-led growth that have to date failed to create meaningful jobs and sustainable livelihoods.
No Clear Plan for Unemployment
South Africa faces unprecedented levels of unemployment, particularly amongst the youth, sitting at 54% when accounting for discouraged workers according to Stats SA, yet the budget provides no clear, targeted framework to address this crisis at scale. There is no significant reduction of public employment programmes (with drastic reduction of the Basic Education Employment Initiative from R5.6 billion to R314 million, earmarked only for project management), no dedicated youth employment stimulus, and no coherent strategy linking education, skills, and labour market absorption.
The continued reduction in allocations to the National Student Financial Aid Scheme (NSFAS) is especially concerning. Thousands of eligible matriculants remain without placement in universities and TVET colleges, yet funding constraints further narrow access to post-school education. Moreover, to tackle the challenge of funding the ‘missing-middle’, the Department of Higher Education has resorted to making loans for students, essentially saddling young people with debt even though there are slim prospects of getting a job after graduation. Cutting student financial aid in this context entrenches inequality and undermines long-term growth.
While increases to the University Infrastructure and Efficiency Grant (UIEG) and TVET Infrastructure and Efficiency Grant (TIEG) over the medium term are welcomed, this comes in the context of significant tertiary education infrastructure backlogs, including teaching and learning facilities and student accommodation.
Health and Education receive negligible real increases but remain underfunded
Health and Education receive just above inflation increases, which are noted following a decade of harsh cuts, but looking beyond the consolidated budget estimates, we see that the envelope has not been expanded for existing services or increasing demand from population growth. In education, a large proportion of the increase goes to Early Childhood Development (ECD), with a minor increase in Grade R teacher pay of under R400 million, far short of Treasury’s approximate R17 billion Grade R shortfall. While this is welcome, as BJC has advocated for resourcing for all children, it means that the budget will not likely address existing constraints. Furthermore, the budget includes reductions to education infrastructure grants and the ECD allocation is nearly R1 billion less than had been announced in 2025.
Health and education are primarily provincial functions. While the national budget determines the overall allocation through the division of revenue, provincial departments decide how those funds are distributed across districts and service areas. The Budget Justice Coalition recognises this division of responsibility, but remains deeply concerned that the budget provides little clarity on how persistent resourcing challenges in these critical sectors will be addressed. Beyond across-the-board cuts and vague calls for “efficiencies”, there is no concrete plan to strengthen delivery without shifting the burden onto communities when government systems fall short. In education, reductions to infrastructure allocations are particularly alarming for lower-quintile schools, where backlogs are already severe and funding gaps persist across the public system. In health, while a special appropriation has temporarily filled part of the gap created by the withdrawal of international aid, responsibility is ultimately shifted back to provinces to find efficiencies and improve outcomes. The budget does not provide clear support, reforms, or accountability mechanisms to ensure this is achievable.
Gender justice requires real fiscal commitment
We welcome the inclusion of Basic Education in the Gender Responsive Budgeting (GRB) pilot, particularly the focus on the National School Nutrition Programme, learner-teacher support materials, and the Funza Lushaka bursary. These programmes have direct implications for women and girls and represent an important recognition that education spending is a critical lever for advancing gender equality.
However, if government is serious about using public spending to address structural gender inequality, the pilot cannot stop here. The Department of Health must also be included, given the profound gendered dimensions of healthcare access, reproductive health, and the burden of unpaid care work.
Moreover, gender-responsive budgeting must be institutionally embedded within National Treasury. This requires a properly resourced and staffed unit to ensure that gender analysis informs fiscal policy from the outset, rather than appearing as a marginal annexure to an otherwise gender-blind budget.
Social Protection: Marginal Increases, No Structural Reform
The marginal increases to social grants do not reflect the real cost-of-living pressures facing low-income households. Housing, electricity, transport, and food costs continue to rise faster than headline inflation.
The Child Support Grant (CSG) and Social Relief of Distress (SRD) grants are below the Food Poverty Line of R855 per month. Unfair and unconstitutional exclusions from social grants under the guise of ‘Targeted and Responsible Savings’ (TARS) push many people and children deeper into poverty. The SRD grant amount is eroded and remains at R370 per month; meanwhile, medical aid members receive inflation-adjusted credits that now exceed the value of the SRD grant.
There remains no clarity on the future of basic income support. In the absence of a clear roadmap toward permanent income protection for unemployed adults, temporary measures remain inadequate to address structural poverty.
Infrastructure for business, not people
The budget places strong emphasis on transport and logistics infrastructure. While economic infrastructure is important, there is no comparable commitment to social infrastructure such as housing, clinics, schools, early childhood development centres, higher education institutions and municipal basic services. Furthermore, the allocations fall well short of the R800 billion per year target in the National Development Plan.
Despite being a pro-infrastructure budget in rhetoric, the true story is in the numbers. Government has argued that increased allocations to rail and road infrastructure will address spatial inequality and improve access to services. While overcoming distance is important in a country shaped by apartheid geography, this framing creates a false trade-off. Improved transport cannot substitute for investment in the services themselves. Roads and rail may move people across space, but they do not fix collapsing clinics or overcrowded classrooms. Spatial justice requires both access to services and functioning public facilities.
National Treasury has further argued that conditional grants are not the only instrument available to fund infrastructure, pointing to mechanisms such as the Budget Facility for Infrastructure and infrastructure financing instruments. While these may support large-scale economic projects, they are not designed to resolve everyday social infrastructure backlogs in schools, clinics, housing and municipal services. Communities continue to rely primarily on conditional grants to maintain and expand the facilities where constitutional rights are realised.
Between 2025/26 and 2026/27, public infrastructure spending on water and sanitation, health, education, and human settlements is decreasing in nominal terms. The increased drive to shift to infrastructure investment is centred around sectors that maximise the export-oriented and capital-intensive private sector rather than reaching communities that need it the most. Infrastructure investment that excludes social infrastructure fails to address lived realities: rising housing costs, electricity tariffs, collapsing hospitals, inadequate classrooms, and basic service backlogs that far exceed official inflation benchmarks. There is no clear plan or budget consideration to fix the water crisis that affects people in major towns and rural areas across the country. Without parallel investment in social systems, infrastructure-led growth risks deepening spatial and economic exclusion.
Fiscal Strategy Remains Narrow
Government continues to rely heavily on inflation targeting and expenditure restraint to manage debt. However, this macroeconomic approach does not sufficiently account for the social and developmental consequences of constrained spending in a context of structural unemployment and poverty.
The core of the government’s fiscal strategy has been to achieve a primary budget surplus to curtail growing debt. We are made to fear that debt-service costs risk outpacing spending in health, education and social protection, and are told that we therefore need to cut spending. The government has committed us to the path of consolidation, but it is failing in its very objectives. Instead, debt-service costs continue to rise as a share of expenditure and we see no significant developmental spending. Instead, a R28.8bn revenue windfall for 2025/26 has been used to line the pockets of high-income earners by pursuing inflationary adjustments to tax brackets, medical aid rebates that disproportionately benefit high-income earners, and other tax benefits. Two-thirds of the population live in poverty, but Treasury chooses to direct any surplus and windfall during this ‘turning point’ away from the people who need it the most.
The budget reiterates “targeted and responsible savings,” including reductions in allocations where performance is deemed inadequate. Yet there is little recognition that poor performance in many departments and municipalities is often driven by systemic capacity constraints, procurement bottlenecks, and governance failures. Cutting transfers without addressing root causes risks further weakening already fragile institutions.
Savings identified in the budget are not clearly redirected toward urgent social priorities. Instead, consolidation appears to take precedence over social recovery.
Investment Without Clarity on Inclusion
The budget continues to emphasise attracting investment as a central growth strategy. However, it remains unclear whether there are targeted efforts to attract productive, labour-absorbing investment that builds domestic capabilities and creates decent work, particularly for young people.
Financial market investment alone cannot substitute for real state-led economic expansion rooted in manufacturing, services, and green industrial development that generate employment at scale. Social protection is a complementary component of inclusive growth, providing access to food and essential household goods and services, enabling unemployed individuals to continue to search for work, and ensuring dignity in the absence of a labour market that creates jobs.
Towards a people-centred budget
The 2026 Budget does not reflect the scale of South Africa’s social and employment crisis. Fiscal consolidation cannot be pursued at the expense of constitutional rights, social protection and dignity.
The Budget Justice Coalition calls for:
- A clear, funded employment strategy;
- Meaningful expansion and provision of public employment programmes as well as the reprioritisation of the Basic Education Employment Initiative;
- Protection and expansion of NSFAS and post-school access;
- Investment in social infrastructure alongside economic infrastructure;
- The implementation of a permanent basic income grant;
- Reprioritisation of savings toward urgent social needs;
- A growth strategy centred on labour-absorbing, inclusive development.
- Expansion of budget participation mechanism to ensure that those most affected by budget decisions are able to influence them
- Reversal of real cuts to health and education infrastructure conditional grants
- A well-resourced, well-staffed gender-responsive budgeting intervention
- Expansion of Gender Responsive Budgeting pilot to include Health, Social Development Programmes (in addition to grants), Police, Home Affairs, and Justice & Constitutional Development
Without a decisive shift toward people-centred budgeting, inequality and unemployment will continue to undermine both social stability and economic recovery.