FISCAL POLICY IN SOUTH AFRICA: CLOSED INPUT-OUTPUT INCOME AND EMPLOYMENT MULTIPLIERS

This research note estimates that South Africa has a fiscal income multiplier of 1.68 and an employment multiplier of 6.9 based on 2018 data. The authors conclude that the R48 billion spending cuts proposed in the 2020 Budget are counter-productive and likely to reduce GDP by R81 billion and destroy 330,000 jobs.

• The estimated average income multiplier for South Africa in 2018 is 1.68, meaning that R1 billion of extra spending is predicted to generate R1.68 billion in extra income. This figure is an average of two closed models: one including only the induced household consumption effect (1.50) and one including both induced consumption and induced investment effects (1.87).
• The average employment multiplier for South Africa is 6.9, indicating that an increase of R1 million in expenditure will lead to the creation of approximately 7 jobs.
• The authors argue that the fiscal consolidation proposed in South Africa's 2020 Budget—which involves spending reductions of approximately R48 billion over three years—is counter-productive. They predict this austerity will reduce GDP by approximately R81 billion (about 0.5 percentage points) and result in the loss of roughly 330,000 jobs.

APA

Schröder, E., & Storm, S. (2020). FISCAL POLICY IN SOUTH AFRICA: CLOSED INPUT-OUTPUT INCOME AND EMPLOYMENT MULTIPLIERS. Institute for Economic Justice. https://iej.org.za/wp-content/uploads/2020/04/Multipliers-for-income-and-employment-Research-note-IEJ-1.pdf

Chicago

Schröder, Enno, and Servaas Storm. FISCAL POLICY IN SOUTH AFRICA: CLOSED INPUT-OUTPUT INCOME AND EMPLOYMENT MULTIPLIERS. Institute for Economic Justice, 2020. https://iej.org.za/wp-content/uploads/2020/04/Multipliers-for-income-and-employment-Research-note-IEJ-1.pdf.

Wikipedia

{{cite report |last1=Schröder |first1=Enno |last2=Storm |first2=Servaas |title=FISCAL POLICY IN SOUTH AFRICA: CLOSED INPUT-OUTPUT INCOME AND EMPLOYMENT MULTIPLIERS |publisher=Institute for Economic Justice |date=3 March 2020 |url=https://iej.org.za/wp-content/uploads/2020/04/Multipliers-for-income-and-employment-Research-note-IEJ-1.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{schrder2020fiscal, author = {Schröder, Enno and Storm, Servaas}, title = {{FISCAL POLICY IN SOUTH AFRICA: CLOSED INPUT-OUTPUT INCOME AND EMPLOYMENT MULTIPLIERS}}, institution = {Institute for Economic Justice}, year = {2020}, month = mar, url = {https://iej.org.za/wp-content/uploads/2020/04/Multipliers-for-income-and-employment-Research-note-IEJ-1.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }