25 February 2026
The Federation of Unions of South Africa (FEDUSA) has studied the 2026 National Budget and our assessment is clear: this is a disciplined fiscal consolidation Budget with measured relief for households, meaningful structural reforms in some areas, but insufficient focus on large-scale job creation. It steadies the books, but it does not yet ignite the economy at the degree and in the manner
required to provide relief to millions of South Africans. FEDUSA believes the country does not have a debt crisis but rather, a jobs crisis. The 2026 National Budget stabilises public finances, but it does not yet confront unemployment with the urgency it demands.
1. Jobs and Economic Growth
The Budget projects economic growth of 1.6 per cent in 2026, rising gradually to 2 per cent by 2028. That is movement, but it is not transformation. At these levels, unemployment will not decline meaningfully.
For a country facing structural mass unemployment, jobs should dominate the Budget. Instead, the dominant theme remains debt stabilisation. Debt is expected to stabilise at 78.9 per cent of GDP in 2025/26 and decline thereafter. That is an achievement. But debt ratios do not create work. Fiscal credibility does not employ young people. Stabilisation must now translate into expansion. FEDUSA supports macroeconomic stability. However, stability without a strong employment drive risks becoming stability for the few, not opportunity for the many. Government must now accelerate labour-intensive growth in manufacturing, agriculture, infrastructure maintenance, logistics, township economies and public services.
2. Cost of Living and Tax Relief: Necessary Support
Workers are under pressure from high transport costs, rising food prices and weak public services. In this context, withdrawing the R20 billion tax increase is welcome. Inflationary adjustments to personal income tax brackets and medical tax credits provide relief to
workers. Adjustments to thresholds and the increase in the VAT registration threshold will assist small businesses and encourage savings.
These are constructive interventions. FEDUSA has consistently argued that economic recovery must not come at the expense of workers’ disposable income. However, tax relief cannot substitute for employment creation. Without jobs, relief measures remain
temporary cushions.
3. Social Protection and the Future of SRD
The allocation of R292.8 billion to social grants in 2026/27 and increases across major grants are necessary and welcomed. With 42% of the population relying on social grants or social relief as a primary income source, protection of these allocations is non-negotiable.
However, the planned discontinuation of the Social Relief of Distress grant from 2027 creates deep uncertainty.
If SRD is to be phased out, a credible and properly funded replacement must already be designed, costed and agreed upon. The review of social security policies and any Basic Income Grant framework must be processed transparently through NEDLAC. Social partners must be part of the redesign because South Africa cannot afford instability in social protection while unemployment remains structurally high.
4. Municipal Collapse and the Water Crisis
For workers and communities, municipal failure is no longer theoretical. It is lived reality. With 63 per cent of municipalities in financial distress, the shift from oversight to active intervention is necessary. The performance-linked reform for metro trading services and the R27.7 billion allocation to support revenue-to-infrastructure reinvestment are steps in the right direction.
However, urgent service delivery failures require immediate action. Long-term reform frameworks cannot substitute for short-term crisis management. FEDUSA remains opposed to the privatisation of water services or sources. Reform must strengthen accountability, technical capacity and public oversight. The central question remains: how will corruption be prevented, capacity rebuilt and immediate water shortages addressed?
5. Public Service Professionalisation and Wage Management
The Public Service Amendment Bill to depoliticise and professionalise the public service is strongly supported by FEDUSA. Separating political office from administrative authority is essential for rebuilding state credibility. The Early Retirement Programme and ghost worker audit demonstrate a serious attempt to manage the wage bill responsibly while protecting integrity in the system. Managing compensation costs must however not undermine frontline services and professionalisation should not be anti-workers. It must protects both public servants and the public they serve.
6. Law Enforcement and Illicit Trade
Strengthening border management, law enforcement and the fight against organised crime responds to legitimate public frustration. Illicit trade destroys compliant businesses and undermines local employment. Workers who pay tax should not compete with criminal networks operating with impunity. Allocations in this area are welcomed, but implementation must be visible and measurable.
7. Health, Education and Welfare
The social wage continues to account for approximately 60 per cent of non-interest spending. Basic education, health and social protection remain dominant allocations and FEDUSA welcomes this. The R26 billion allocated to provinces to bolster the HIV and AIDS programme following the withdrawal of PEPFAR funding is welcomed. FEDUSA called for decisive intervention following the unexpected
decision by the U.S last year.
Increases in early childhood development funding are positive. However, the scale of expansion must match the depth of poverty and youth exclusion. The National School Nutrition Programme must be protected from real erosion, especially in the context of food price pressures.
8. State-Owned Companies and Governance
Improvements at Eskom and Transnet are noted. However, long-term sustainability remains fragile. Any further financial support must come through disciplined reprioritisation. The fiscus cannot remain an open-ended backstop. The centralisation of unclaimed retirement assets to prevent perpetual fee extraction is welcomed. Workers’ funds must benefit workers, not institutions indefinitely.
Conclusion
The 2026 Budget stabilises the public finances. It avoids new tax burdens. It protects core social spending and introduces structural reforms in infrastructure and public administration. But it does not yet rise to the scale of the unemployment emergency. Austerity’s legacy has left deep scars. Even reasonable allocations cannot fully close the gap created by years of underinvestment and service
decline. FEDUSA will continue to push for labour-intensive industrial expansion, sustainable and transparent social security reform, professional and corruption-free municipalities, stronger enforcement against illicit financial flows and decent work at the centre of economic policy.
South Africans do not measure success in debt ratios. They measure it in jobs, functioning services and restored dignity and the country most certainly cannot stabilise its way out of unemployment. It must grow its way out of it.
END.