Why basic income support makes sense

THE basic income grant debate has been rumbling in South Africa for two decades.

The reintroduction of the “social relief of distress” grant by President Cyril Ramaphosa, for unemployed people and unpaid caregivers who don’t receive any other social grant or unemployment insurance, provides the ideal moment to introduce permanent basic income support for poor and unemployed adults.

I prefer the argument for basic income support, rather than a universal basic income grant. That’s because South Africa already has social grants for poor children up to 18 years of age, poor older people over 60 and other vulnerable groups.

What is needed is a social protection instrument that would address the country’s unemployment pandemic by assisting people aged 18 to 59 who are living in poverty – basic income support. There are at least five arguments for basic income support. First is the moral case for providing support to the poor, which in South Africa is also a constitutional right.

Second is the positive economic impact: boosting the purchasing power of the poorest will create income multipliers, stimulating local economic growth and livelihoods.

Third is social solidarity and cohesion. The recent spate of looting in parts of the country, ostensibly triggered by the imprisonment of former president Jacob Zuma, was just as much an outburst of frustration and anger against a system that excludes millions of citizens who see no hope for their future.

The social relief of a distress grant will alleviate some of this hardship and make everyone feel recognised and included.

The fourth argument for a basic income support is Covid-19. The pandemic and the lockdowns affected lowpaid and informal workers badly, and prompted a R500 billion social and economic support package from the government.

Though temporary, these interventions highlighted the underlying problems of chronic poverty and unemployment that receive too little policy attention in “normal” times. This has prompted calls to make these emergency relief measures permanent.

Finally, a basic income support would improve the effectiveness of the existing social grants. The child support grant is intended to meet the basic needs of 13 million children in low-income households. But instead this cash is diluted among the entire family because unemployed parents and carers also need food and clothes.

It is true that the grant will be expensive. Even at its low R350 a month (less than the food poverty line at R585 a month), if 10 million people claim the special relief grant (there are 10.3 million unemployed and discouraged work seekers, only a small minority of whom can claim UIF) the cost would amount to R42 billion each year. Where will this money come from?

One possible source is more efficient government. Reducing corruption, mismanagement and wasteful expenditure would release billions. Cutting government spending by 2% – 3% would be enough to cover the cost of the basic income support.

The second source of revenue is to raise taxes. This is never popular. Nonetheless, South Africa is an upper-middle-income economy, and one of the most unequal countries in the world. That suggests that there is much scope for redistribution.

A third way of managing the costs of expanded social protection is to grow the economy.