The introduction of a basic income grant could solve three issues in the country, writes Mikhail Moosa.
Why did the Minister of Social Development recently announce that her department was considering the introduction of a basic income grant (BIG)?
In South Africa, there are more social grant beneficiaries than formally employed people.
Does the country really need another social grant programme and how will this one be different?
What is a BIG?
A basic income grant is a cash transfer from the state to citizens – or residents – to ensure that everyone, regardless of age, employment or ability, has a minimum level of income.
A BIG is likely to be targeted at unemployed people who do not receive another social grant or UIF payment.
This isn’t a uniquely South African idea.
The idea of basic income has a long history and has supporters on both the ideological left and right. Different forms of a BIG have been trialled in Namibia, India and Finland and several trials are ongoing around the world, from California to Kenya.
Basic income has recently garnered support in wealthy countries, as seen in Andrew Yang’s bid for the US Democratic Party’s nomination, the UK Labour Party’s 2019 manifesto and Spain’s recent announcement that it would introduce a similar policy to recover from the coronavirus.
Why can a BIG do?
When a BIG was first debated in the early 2000s, economist Michael Samson noted that “SA’s social safety net has a very loose weave.” People older than 18 and younger than 60 fall through the state’s safety net.
Social grants are designed this way because – in theory – adults of working age should be able to find jobs, while children and older persons are groups that are perceived to be more deserving of social assistance.
But the unemployment rate has been exceptionally high for decades and millions of South Africans have never had a job. Children enter adulthood without the support of a grant and into a labour market of limited opportunities.
The special Covid-19 grant was supposed to be a temporary remedy, yet millions of applications have been rejected and payments have been delayed. Under lockdown, many people have lost their incomes but still lack state support.
A BIG could solve three major issues in the economy.
First, a BIG, if less conditional, is much simpler to administer than the Covid-19 grant. The latter requires tedious background checks which make the process more complicated and expensive.
Second, a BIG could put cash in the hands of millions of South Africans who urgently need it. The lockdown has caused an immense economic shock and existing state support has been insufficient.
Third, a BIG could provide support to millions who fall through the safety net and potentially spur employment. Young South Africans are burdened by exceptionally high levels of unemployment and lack basic financial resources to find jobs.
What can’t a BIG do?
Based off the minister’s comments, it seems unlikely that a potential BIG would be a universal basic income (UBI) in its true sense.
A UBI entails everyone, from billionaires to the destitute, receiving the same amount and wealthier residents pay theirs back in tax.
Any potential BIG would not be able to fulfil the loftiest ambitions of a UBI, where the working classes could be liberated from the dull compulsions of economic life and take up more fulfilling and creative labour.
A BIG would essentially be an unemployment grant.
Introducing a BIG will be costly. Sceptics sympathetic to the cause of a BIG might argue that the money could be better spent on other welfare policies, such as improving school facilities, creating affordable housing in city centres, or funding social services in townships.
A conservative critique might simply reject the principle of the government introducing additional expenditure during an unprecedented economic crisis, particularly when existing funds have not been used optimally.
The BIG idea
Basic income is not a silver bullet. It won’t heal our divisions or end corruption and it will almost certainly result in tax increases.
But social grants have been arguably the most successful development policy under democracy.
Grants are not only effective at reaching people most in need and providing income support to poor households, but they also seem to be popular.
A 2018 Afrobarometer survey revealed that most South Africans, across a range of demographics, support providing social grants to the poor.
While it is important to scrutinise its affordability, we should also consider whether SA can afford not to provide support to millions of unemployed people.
Sceptics should recall perhaps the earliest example of the idea of basic income in Thomas More’s Utopia (1516): “It would be far more to the point to provide everyone with some means of livelihood, so that nobody is under the frightful necessity of becoming first a thief and then a corpse.”
– Mikhail Moosa is the Project Leader for the SA Reconciliation Barometer at the Institute for Justice and Reconciliation. You can follow him on Twitter: @Mikhail_Moosa
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