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SA’s socio-economic tinderbox demands Basic Income Grant (BIG) gets attention in the Budget

Picture: Karen Sandison/African News Agency(ANA)

Picture: Karen Sandison/African News Agency(ANA)

Published Feb 22, 2022

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By Katishi Masemola

While the July 2021 riots in South Africa have ignited debates on their triggers there is a general agreement across (most) analysts of various persuasions, that the dire socio-economic conditions facing the majority of the citizens are their catalysts, whatever their spark.

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It has become abundantly clear that the now restored social stability would remain fragile noting the persisting triple-crises of high joblessness (at 46.6 percent at so-called expanded definition and 78percent for youth aged 16 and 24 years), poverty rate of anything between 60 percent and 67percent (with one in four citizens unable to afford adequate food), and deep structural inequality (with South Africa generally recognized as the most unequal society on Earth).

Several analysts confidently assert that if the triple-crises are not addressed, with different nuances and emphasis regarding priority attention on each of the three, then another flare-up is inevitable no matter what the spark maybe that time around.

With all said and analysed, the decades-old question remains, what is to be done (to avoid another social unrest, which would inevitably be fuelled by these dire socio-economic conditions). The answer(s) to the question(s) are plainly increased job creation and a widened social safety net.

On the job creation front, the results of the past 25 years, since the adoption of GEAR (growth, employment and redistribution) macroeconomic strategy in 1996, have been dismal, and the targeted numbers of jobs for creation never achieved. If anything, South Africa has experienced what is referred to as jobless (and what some refer to as "job-loss") economic growth in that period when the economy failed to absorb the unemployed and even bled existing jobs.

Given the aforesaid, there is an "infant" yet growing chorus for the government to introduce job guarantee program (JGP), conceptually explained as a state-driven and coordinated employment program, in which citizens are guaranteed jobs in doing community and public works at wages to be still determined but with the existing national minimum wage in mind. The debate on the validity and workable mechanics of this policy intervention are still unfolding. This is a discourse for another day except it has become urgent for our country to have discussions on.

What has been on the radar screen for more than two decades is the call for the introduction of a basic income grant ("BIG") in which every citizen, irrespective of their employment status and income bracket, is paid a grant without means-testing to avoid burdensome administrative glitches and potential corruption and inefficiencies, going with a targeted approach.

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The "BIG-question" is how will the universal grant be funded? Many civil society formations and research institutes have made a lot of fiscal and other policy proposals in this regard. The Institute of Economic Justice (IEJ) and C19 Coalition argue that affordability is not an issue but just an excuse to avoid the introduction of this intervention by those opposed to it.

In their media releases in April and July 2021 regarding funding proposals they have worked on, the IEJ asserts that: “…this work clearly shows that (U)BIG can be implemented, with costs overwhelmingly borne by South Africa’s most affluent…and the argument for implementing it has never been more compelling”. Among others, in their funding options, the IEJ proposes the introduction of Social Security Tax, removal of tax breaks for higher earners and corporates, as well as the introduction of new taxes, such as tax on financial transactions, a resources tax, and wealth tax which may raise anything between R275 billion and R355bn to fund different levels of BIG, say at R585 per month (food poverty level), R840 per month (lower bound poverty line), and R1 268 per month (upper bound).

The proposal for BIG at R100 per person was recommended back in 2002 by the Taylor Committee, established by government to look at the overhauling of the social security system following the 1994 democratic breakthrough, and this proposal was as a result of submissions by a coalition of trade unions, civil society formations, and religious groupings among others but the recommendation did not see the light of day.

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Twenty years later, and at the back of the Covid-19 pandemic, another coalition (C19Coalition) campaigned for the introduction of BIG. Together with IEJ and others, they call(ed) for the immediate reinstatement of the R350 Social Relief of Distress (SRD)/”Covid” grant, which was terminated in April 2020 after nine months and was reinstated in the aftermath of the riots despite initial calls that such a grant should not be terminated.

It was on11th June 2021 when the Covid19 Peoples Coalition called for the reinstatement of the R350 grant and argued that this was the first step in the introduction of BIG. So, it took the loss of limb and life, call it the riots, for the SRD/Covid grant to be reinstated. At R350 per unemployed person in ages between 18 to 59 years for the 12.5 million unemployed, the needed funds stand at R52.5 million.

However, there remains a call for the BIG to be rolled out, starting with R585 per month per unemployed adult (in ages of 18-59 years), pegged at food poverty line, in the short-run and for this to be increased to R840 (a lower bound poverty line) in the medium term and to R1 268 (or upper bound poverty level) in the long-range.

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We do not need another flare-up of social unrest, and loss of limb and life going with it, to knock “policy-sense” to those in government and the ruling ANC that we need BIG to be urgently introduced and rolled out in the light of triple-crises. That the country's President, in a State of the Nation Address (Sona) earlier this month, Cyril Ramaphosa extended the Social Relief of Distress (SRD) grant by another year is to be welcomed, but a certainty on the permanent nature of this grant is needed as the country discusses the introduction of BIG.

The 2021 unveiled Green Paper on Social Security Reform, including the proposal for all working people to make contribution to a Social Security Fund by the Department of Social Development is a welcome move and a concrete step in taking forward the goal of realizing BIG.

The debates on the funding options for BIG will remain intense but the convergence on the principled agreement on the need for a universal basic income for every citizen will be historic, even if it took loss of limb and life.

It is hoped that the finance minister, Enoch Godongwana, would not squander an opportunity offered by his upcoming Budget Speech but use this occasion to announce a decision to introduce BIG starting from March 2023, to address the prevailing humanitarian crisis stemming from the triple-challenges of joblessness, poverty and inequality whilst the country works on dealing with job creation, which has been an elusive goal over the last three decades.

Anything short of a decision on the introduction of BIG, beyond the year-long extended SRD grant of R350, and concrete policy steps towards job guarantee scheme, coming out of this 2022/23 budget speech, would be as good as a repetition of the spectacularly failed yet recycled fiscal policy path of the past.

We don’t need another social unrest to flare up in order to get a message that BIG is an immediate intervention this country needs, right now. Mister Minister, the ball is firmly in your court and do not miscue it, but play it carefully as expected by the 12.5 million of the unemployed.

Katishi Masemola is the director & Consultant at Semo Advisory and Consulting.

*The views expressed here are not necessarily those of IOL or of title sites.

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