African Leader 2022

Page 44

IS THE BASIC INCOME

GRANT FEASIBLE?

Duma Gqubule weighs in on the heated debate around the basic income grant’s viability

T

wo decades after a seminal report on social security recommended that the government should implement a Basic Income Grant (BIG), there has been much debate around the issue, with economists trading intellectual blows in heated arguments about its feasibility. In 2002, the Taylor Report stated: “The last vestiges of state racial discrimination have subsequently been removed, but a key underpinning principle of the old system remains in place – the assumption that those in the labour force can support themselves through work, and that unemployment is a temporary condition. “In reality, those who cannot find work and who do not, or no longer, qualify for Unemployment Insurance Fund payments fall through a vast hole in the social safety net. Ideally, people should be able to earn a living through employment rather than rely on welfare payments. However, given the size of the unemployment problem and the extent of the growth challenge, full employment is not a feasible scenario in the short- to medium-term.” In 2020, in the wake of the coronavirusinduced pandemic, countries decided to spend their way out of the crisis. World Bank economist Ugo Gentilini says 734 cash-based measures were implemented in 186 countries. In South Africa, the government topped up social grant payments for six months until October 2020 and introduced a R350 a month social relief of distress (BIG) payment for almost 10 million people. The government has extended the grant until the end of March 2023. There has been a proliferation of reports, most of them from progressive think-tanks, that explain how

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Duma Gqubule

The BIG will stimulate the economy since the recipients will not hide it under their mattresses. They will spend it in local economies in Soweto, Eldorada Park and Khayelitsha. a BIG can be implemented. Social justice activists say the grant must be a platform for the introduction of a BIG in April 2023. Never before has National Treasury been under such pressure. South Africa has a progressive Constitution that includes socioeconomic rights to housing, food, water, education, social security, healthcare, a healthy

environment, land, and redress for past discrimination, which can be judicially enforced. Excluding the right to basic education and children’s rights, which are immediately realisable, the Constitution says: “The state must take reasonable legislative and other measures, within its available resources, to achieve the progressive realisation of each of these rights.” The Constitution also says: “Everyone has the right to … social security, including, if they are unable to support themselves and their dependents, appropriate social assistance. The state must take reasonable legislative and other measures, within its available resources, to achieve the progressive realisation of each of these rights.”

LOCIAL SECURITY SPEND

In 1994, the first democratic government inherited a social security system that mostly provided social security for the elderly and the disabled and had about 2.9 million beneficiaries. The government spent 2.4 per cent of gross domestic product (GDP) on social security. In April 1998, the government introduced a grant of R75 a month for children under eight years of age. Over the next 15 years until 2013, the government implemented a constitutional obligation to extend the grant to all children. During the 2019/2020 fiscal year, the government spent R175.2-billion (3.2 per cent of GDP) on social grants for 18 million beneficiaries. Therefore, there has been a small increase (0.8 of a percentage point as a share of GDP) shared between 15 million more beneficiaries. The next priority is to provide income support to the working-age population.

AFRICAN LEADER ISSUE 56 | MARCH 2022

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2022/03/15 9:11 AM


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