Wage subsidies and COVID-19: The distribution and dynamics of South Africa’s TERS policy

Timothy Köhler () and Robert Hill

Development Southern Africa, 2022, vol. 39, issue 5, 689-721

Abstract: Wage subsidy-based job retention policy has served as a dominant tool used to mitigate job losses in the context of COVID-19. In South Africa, such a policy served as a core component of the government’s policy response: the Temporary Employer-Employee Relief Scheme (TERS). We make use of longitudinal survey data to analyse aggregate and between-group TERS receipt during the pandemic as well as the relationship between receipt and job retention. We find that the policy reached millions of workers but coverage was highest during the beginning of the pandemic. Although several groups disproportionately benefited, vulnerable groups were over-represented amongst recipients over time. Benefits were higher in relative terms for lower-wage workers. Although not causally identified, we find evidence of a significant, positive relationship between TERS receipt and job retention, consistent with the policy being successful in its aim of minimising job losses, however only during the most stringent lockdown period.

Date: 2022
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DOI: 10.1080/0376835X.2022.2057927

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