A few days ago, Statistics SA announced that South Africa’s unemployment rate had reached a record high of 34.4%, or a staggering 44% if we use the expanded definition of unemployment, which includes those who have given up looking for work.
More than 46% of young people under the age of 34 – and a staggering 63% of under-24s – are unemployed.
The simple fact is that our economy is unable to generate enough jobs to reduce and eliminate unemployment, which leaves millions of South Africans without any access to an income. It is physically impossible for any adult of employable age to live day to day, month to month and year to year without income.
Prioritising the implementation of a Basic Income Grant – or Basic Income Guarantee (BIG) – is a social, moral and historical imperative crucial to the sustainability of South Africa’s constitutional democracy.
Appropriately funded and managed, with no wiggle-room for state incompetency or corruption, the BIG could finally lay the foundation for sustainable healing and justice in post-apartheid South Africa.
To those who say such a grant is unaffordable, the obvious answer is that South Africa can no longer afford not to.
Inequality was the overarching policy of apartheid and its colonial predecessors. The fact that inequality has deepened in post-apartheid South Africa is a shameful slur on the state, the governing parties, the business sector and all South Africans of social conscience and integrity.
Among the funding mechanisms that the state is duty-bound to consider are redistributive measures recommended by the Truth and Reconciliation Commission (TRC) 22 years ago.
Among the commission’s key recommendations were that those to whom it did not give amnesty for apartheid-era human rights violations should be prosecuted (all being equal before the law), and that the state should implement a reparations policy.
Recognising that funding reparations were expensive – but nonetheless imperative in contributing to narrowing the “intolerable” inequality gap – the commission proposed a number of redistributive measures.
None of the recommendations was implemented.
Commission chairperson Archbishop Desmond Tutu said later that the mood in the country created by its first democratically elected president, Nelson Mandela, was such that many businesses and individuals would have been happy to contribute to the reconstruction of the country. In a sense, it could also be a cathartic mechanism to pay something back in acknowledgement of the privilege they accrued under apartheid.
The archbishop referred to the unimplemented recommendations as the TRC’s unfinished business.
Despite government’s efforts to provide houses, security and comfort to citizens – the millions of fully subsidised homes that have been built and connections made to the water, sewerage and electricity grids – 22 years after the TRC published its recommendations, levels of poverty, joblessness and inequality have increased. Unsustainably so.
On top of deeply entrenched structural barriers to economic inclusion, the impact of the global Covid-19 pandemic has been devastating. According to the Business and Human Rights Resource Centre, social scientists from five South African universities recently estimated Covid-related job losses at three million, of which two million jobs were lost by women.
Nearly half the South African population is living in poverty, a burden that is disproportionately carried by women, with 74% of women-headed households living below the poverty level.
Dismantling the deeply entrenched structures that created economic, social, spatial and environmental injustice will require all of our efforts. South Africa has a well-established social assistance programme – of cash transfers – but the programme makes no provision for able-bodied adults between 18 and 59 years, the assumed age of economic activity.
Their exclusion condemns many to live in intolerable conditions.
Section 27 of the South African Constitution guarantees every person the right to sufficient food and water and to “social security, including, if they are unable to support themselves and their dependants, appropriate social assistance”.
It is in this context that the debate about the BIG must be understood. When an economy is unable to provide enough jobs for people to earn an income and take care of themselves financially, then the state has a duty to provide relief.
It is not a gift or a handout; it is a right.
In response to the economic turmoil occasioned by the Covid-19 pandemic, the state introduced a temporary Covid-19 Social Relief of Distress Grant of R350 per month. Payment of this grant has been extended to March 2022. It’s far from perfect, and hardly sufficient to keep the wolf from the door, but it is helping nearly seven million beneficiaries.
The first step on the road to a BIG is to continue to provide the social relief grant of R350 per person per month and expand access to whoever applies for it.
But we must recognise this grant for what it is: A commendable state response in an economic emergency wrought by a health pandemic – a Band-Aid to stem the flow of blood from a gaping wound.
The next step must be finding the means to address legitimate concerns about universality, quantum and affordability.
The benefit of the grant being universal – that is, available to every adult regardless of their personal financial circumstances – is that it reduces the barriers to access for those who need it most by reducing systemic errors. But extending the grant to all, including those who don’t need it, will add to the financial burden on the state.
The International Growth Center proposes that “transfers should be made universal or accessible on an opt-in basis (i.e. beneficiaries self-evaluate their eligibility), where feasible to try to reach as many in need as possible”.
It makes obvious sense to reduce unnecessary spend while securing ease of access. As a start, an opt-in system for all who are not registered for income tax, for example, could be a sensible balancing condition that would be relatively easy to manage.
The question of quantum is equally challenging.
The most recent data published by Stats SA shows the Food Poverty Line at R585 per person per month. This is the amount of money a South African needs to afford the minimum daily food required. The same report places the Lower Bound Poverty Line at R840 per person per month and the Upper Bound Poverty Level at R1,268 per person per month. These levels are a combination of the minimum daily food requirements plus non-food essentials.
In the ideal circumstances, we should be able to provide social security that meets, at the very least, the upper-bound poverty level of R1,268 per month. This could eliminate poverty in as little as three years. But it would cost the fiscus about R415-billion per year.
If we lower our initial expectations and set the quantum at the Food Poverty Line of R585 per month, the amount of money required drops to R197-billion. This number could be further reduced to R157-billion by restricting payments to unemployed people only. Reaching 60%-80% of this group, which is likely in the initial period, would further reduce annual costs to around R95-billion.
How does the country afford it?
If the new minister of finance follows through on the plan to introduce zero-based budgeting – a budgeting process aimed at reducing wastefulness and identifying absolute spending priorities – then this would free up significant cash. Correctly implemented, it would place the BIG into the budget as a non-negotiable expense and build the rest of the budget around it.
Secure access to sufficient food and water is the most basic of needs of every human being. It should be budgeted for before anything else.
According to the Institute for Economic Justice, eliminating government waste would save about R20-billion. This is a very conservative figure when you consider that State Capture is said to have cost the South African people about R500-billion.
If properly prioritising the budget falls short of the BIG funding need, tax mechanisms must be considered. It is here that the TRC’s recommendations come into focus. The Institute for Economic Justice estimates that a wealth tax of 1% on the top 1% of earners in South Africa would bring an additional R63-billion in revenue.
South Africa has the resources to fund this. It is a question of priorities.
Finally, it should go without saying that economic growth that creates jobs is the pathway we are all looking for. Championing and supporting a BIG does not equate to giving up on an economy that grows inclusively and gives every adult, of employment age, the opportunity to earn a decent wage and experience a life which is fulfilled by meaningful employment.
The money spent on the BIG will not be lost to the economy. It will be spent by the recipients in the economy and contribute back to our revenue through VAT and taxes. DM
Thoughtful article. Thanks Brett.
The money will be stolen. Prove me wrong
So, anyone may have as many children as they wish, regardless of the consequences since others will take care of their every need. And I work my backside off to enable all of this. Everyone is responsible. Not only the government and it is time communities start realizing that the primary responsibility is theirs.
To work your backside off is your choice, Gerrit. (a worthy choice, but) Does it really make you feel better about it to know that others are starving? Will it be disrespectful to your efforts if/when our society, within which you so arduously contribute, chooses to provide such a universal life-line?
If pigs could fly….but they can’t. And if we would have a government that actually could create an “Appropriately funded and managed, with no wiggle-room for state incompetency or corruption, ” fund of any kind, then we would be in a very different place. But they can’t, and we aren’t. The ANC just wants more taxes to steal and not face any accountability for the mess they have created.
BIG, in South African context, from tiny tax base to corrupt activity, all the way to extreme unemployment cannot finance the system sustainably. And we havn’t even chatted about things like NHI at all yet. You planning more taxes for that?
The IEJ report is a heavily biased report that wants to raise taxes…thats it. All other suggestions are pie in the sky, just like you suggestions.
To end my analogy, what you are suggesting without any proper facts on feasibility, is to load the pigs on a catapult to make them fly, at least for a short time, no matter the consequences when they finally land.
When do we achieve equality? When my after tax income equals someone else’s after grant income?
If BIG happens, buy SA Breweries shares, that is where the money will go, not to “inclusive economic growth”. Brett, what are you smoking? How does BIG translate to “a life which is fulfilled by meaningful employment”. Such a nirvana can only be achieved by an eduction system that trains people to do the jobs that are on offer. However the education budget will probably be constrained in order to pay for BIG.
So basically what you are saying is that the extremely few, poor, incredibly over-stretched, overburdened taxpayer has to pay even more for the absolute mess up that this ANC led government has presided over for the past two and half decades?
Theft, corruption, mal-administration, pathetic policies, ineptness on a vast scale and pure hubris on the part of the ANC spring to mind immediately.
If the above had not occurred we would not be in this predicament at all and I do not see any change to it going forward either.
The only difference being a smaller and smaller tax base as all the tax payers leave the country.
There are 2 reasons why the economy cannot generate enough employment for our people. The ANC is responsible for both and the resulting fallout. Get rid of the ridiculous labour laws and BEE (and associates), the economy would immediately begin to grow. The BIG requirement is merely another sprout from these 2 causes.
Brett clearly demonstrates a disconnect from reality with this opening line “Appropriately funded and managed, with no wiggle room for state incompetency or corruption…”
As long as the ANC is in charge, and is pushing it’s anti-growth economic policies, I would rather send what little money I have to spare to organisations that will fight against this mafia posing as a legitimate government, and help those I meet personally in whatever capacity I CHOOSE.
“22 years after the TRC published its recommendations, levels of poverty, joblessness and inequality have increased. Unsustainably so.”
Agreed, but Brett is quite selective in his memory in regards to how this came about. By the early/mid 2000s, unemployment was slowly and steadily ticking downwards. Then along came the financial crisis and Zuma, and the revelation of all the corruption at the Zondo commission, and investment, and jobs, have been in decline ever since.
The absolute first priority is to create an environment where people can sustain themselves and thrive Brett. Not to create a society where young people are forced to live on a pitiful (because that’s what it is) basic income grant of a few hundred bucks.
It just occurred to me that maybe Brett thinks the unemployed people who would be clapping for this idea, regardless of how it is implemented, are Daily Maverick readers. If you read this Brett, I think you completely misjudged what the readership here is. And to be clear, I help those who need it more than most, and I would, again, ABSOLUTELY and COMPLETELY support an environment where people and communities can look after themselves. Not one where they have to reply on government and an ever shrinking tax base to afford barely nutritional food, as that all the BIG will be able to pay for.
Someone’s been smoking the Milton Friedman pipe – let me guess – you believe we have free markets that afford everybody the opportunity to look after themselves (perhaps with your help). Let’s try this one: patriarchy is not a problem – we just need government to provide an enabling environment (for women to look after … …
Well argued article. Thanks
The problem, young Brett, with such socialist inspired ideas is that you will eventually run out of other people’s money.
Too true.
The problem with you, Macleod, is you apparently have a very limited understanding of money; not to mention failure to discriminate between the merits of a proposition and the ideological label you attach to it – one that I guess you’ve never really looked into…. – not a pseudonym for McCarthy, perhaps?
Richard, Play the ball not the man. How do you work out that MacLeod has a “very limited understanding of money”? Or that he has never really looked onto the matter?
Richard, please tell us how the ANC will afford BIG, and by how much individual tax will have to rise
And how we are to achieve “appropriately funded” and “no wiggle room for state incompetency or corruption” in todays South Africa?
So BIG is a Right justified by historical apartheid inequality. This is populism at its worst. It sounds Good but results down the road in even greater problems. It is also an admission that creating employment can no longer happen. The country cannot afford BIG and the taxpayers wont accept it.
You fundamentally cannot give people things for free. Why must some invest effort when others get it for free, that is unfair and patently unjust. The architecture needs to change to allow for a model to exist that is more relevant to the realities on the ground. Both capitalism and communism are not ideal and have issues, but they both have tenets that are good. A model that allows for those good tenets of both needs to be considered. The reward of capitalism to encourage innovation and the social net and almost guaranteed jobs of socialism. Any government should be for the people and by the people that it serves. The overarching justice and economy should be so simple and logical that it doesn’t require any input from those that govern. They should be tasked with governing when and where required. The architecture needs to be put in place to allow this paradigm to be created. It must be just and fair and acceptable to all.
The moral of the story is that, if we could get rid of the corruption, we are a very strong and wealthy country that can achieve a lot.
Well argued, Brett. All non-partisan international social research supports your conclusions. Your argument will be strengthened by a stronger link to the immoral, economic corruption of apartheid prior to 1994 – it’s not an ANC problem alone, although I agree more should have been done since 1994 to stem the devastation we inherited.
Unfortunately, apartheid-denialism is strong, and some will offer convenient tropes about Zuma and corruption, which is all they will admit to because it suits them to not be complicit in the macro-issues of racially-driven economic devastation prior to that. The most annoying aspect of ANC corruption must be that it gives racists a free-pass to avoid any responsibility for the scorched earth policy that was apartheid, including et al mass land disenfranchisement, dompas, job reservation, bantu education, and under-supply of services.
In 1994, 38.5% of black households were electrified on the grid, as opposed to 99.8% of whites. The situation many respondents here suggest are vastly simplistic; whilst among DA populists, the ANC’s record of improving the lot of black South Africans is commonly unnuanced.
People are hungry today and can’t wait for a pie-in-the-sky “trickle-down” globalised economy to kickstart. BIG is a moral and economic imperative. And yes, the top 1% will need to pay it.
Today the top 1% is people who earn 30k+ pm.
Tomorrow the top 1% is the people who earn 20k+ pm.
The day after than 10k+ pm.
And a few days later, 5k+ pm.
Because it’s entirely realistic that SA will have a future where the majority of high earners have bailed, and all that’s left is the struggling working class.
Do people need to eat today? Yes. Should a temporary measure be considered? Yes. Should a basic income grant become a normal way of life? Absolutely not.
O, the dignity of earning your own livelihood.
Please outline a realistic path to “appropriately funded” and “no wiggle room for state incompetency or corruption” in the context of South Africa of 2021?
A sincere question as one of the “15%”!