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