South Africa’s poor economic conditions coupled with a steep rise in unemployment provides an opportune moment for the government to rethink its social welfare programmes, as more people become vulnerable to poverty.
Several calls have been made for a Basic Income Grant, with some proposing a universal basic income grant.
What is the distinction between Basic Income Grant and Universal Basic Income Grant?
The Basic Income Grant (BIG) is a form of social assistance. Unlike other common social grants (disability grant, elderly grant or child grant), this particular grant is intended to provide an income source to people who cannot access employment or make meaningful income. Think of it as a way to assist people struggling to find jobs because of structural unemployment, in the same way that an elderly person cannot work because of old age. In both instances something creates a structural barrier for this group of people to earn an income.
The target group for this Basic Income Grant are able-bodied people aged between 18 and 59 years, who otherwise cannot access employment for whatever valid reason.
However, a Universal Basic Income Grant(UBIG) is a grant offered to all citizens, employed and unemployed, abled persons and those living with disabilities, young and old. The grant is intended to place poor people above the food poverty line, and replace any other social grant programs that currently exist.
What necessitated a Basic Income Grant?
The idea of a Basic Income Grant was first proposed by a network of civil society organisations in the 2000’s. The South African government established a Committee of Inquiry (Taylor Committee) to investigate the viability of a Basic Income Grant. In its 2002 report the Taylor Committee recognised that South Africa has a complex history of structural inequality and persistent poverty that treads along racial and class lines. And, to this day, many South Africans, particularly those from historically disadvantaged communities, continue to suffer from the challenge of unemployment disproportionately; with the unemployment rate currently standing at 32,5% (Stats SA). Although South Africa’s social welfare system has reduced poverty for about 18 million people, there remains a large group of people who face structural unemployment challenges that should be supported.
In addition, the devastating effects of Covid-19, coupled with poor economic performance and low investor confidence, many more South Africans are in desperate need for social welfare assistance as unemployment and poverty levels continue to rise.
What is the proposed grant amount?
Various amounts have been proposed for a Basic Income Grant by different organisations. In 2002, the Taylor Committee proposed R100 per month with inflation based increases. The amount was considered sufficient to reduce extreme poverty, was considered “affordable” for the government, and would prevent discouraged job seekers from continuing to look for work or other sources of income.
In their campaign quest for a Basic Income Grant, Black Sash, trade unions and members of the C-19 People’s Coalition proposed that the government implement permanent social assistance amounting to R1 268 per month to people aged between 18 to 59 as a start. This amount is believed to be enough to keep beneficiaries above the poverty line.
The C-19 People’s Coalition also proposed that the Covid-19 Social Relief of Distress Grant needs to atleast be R580, which is sufficient to reduce the food poverty line.
Both organisations agreed that the R350 Covid-19 grant was a step in the right direction to ultimately getting a Basic Income Grant, and eventually paving a way forward to a universal Basic Income Grant. However, they also believed that R350 was largely insufficient as it did not meet the food poverty line and the poverty line.
In light of the devastating effects of Covid-19, more calls are mounting to pressurise the government to move towards a Basic Income Grant. Many countries across the world are also moving towards a Basic Income Grant, to significantly reduce poverty and hunger particularly in the developing south, Kenya, India, Namibia and Mongolia. But many questions float, about how this will be funded, and whether in the case of a Universal Basic Income Grant, is it even fair that income earning people receive a grant.
The big questions?
While there is consensus about the need for a basic income grant, there is a problem around affordability.
In the 2021/22 budget, National Treasury did not increase social grants in line with inflation for the first time in more than a decade, in order to cut expenditure.
If one works with a Basic Income Grant of R580 per month per beneficiary, can National Treasury raise the R380 billion needed to fund a Basic Income Grant?
The question of what the conditions are for receiving this grant, still needs to be worked out. While it is clear that the Basic Income Grant is targeted for unemployed people aged between 18 and 59, it is not clear whether this is targeted for people who have not earned an income for six months, a year or two years. And, if you are seasonally employed or earn an income in the informal sector, how do you prove that you should be eligible for the grant? Would the criteria used in the indigent register apply, and what criteria qualifies a person poor?
In recent times, government’s ability to process grant payments on time has been a challenge. With more people possibly becoming beneficiaries of the Basic Income Grant, what kinds of capacities should government put in place to ensure that payment processes are seamless?
Where will the financing for this come from? Various suggestions such as the upward adjustment of value-added tax, income tax, carbon tax, re-allocation of public expenditure or increased corporate tax have been raised.
Anyone in support?
The campaign for a Basic Income Grant is fast gaining traction, largely due to the impact of Covid-19. Over 280 000 people have supported the petition for a Basic Income Grant on Awethu Amandla Mobi, and some political parties have already made public commitments in support of this grant.
Here is what some Ministers and MPs have had to say about a Basic Income Grant.
What are your thoughts on the proposal for a Basic Income Grant? Do you believe that this is a good way to reduce poverty and hunger in South Africa? Share your comments with us on our social media platforms and in the comments section of this blog.