Researchers must tell government to introduce universal basic income grant, says deputy minister

The Social Security Review Volume 2, released on Monday, centred around “Social security in the time of Covid-19”, with contributors from government, civil society, academia and the private sector coming together to explore how the resilience and inclusivity of social protection structures in South Africa can be enhanced — particularly in the face of large-scale socioeconomic shocks.

The publication was launched by the National Department of Social Development (DSD), in partnership with the Human Sciences Research Council (HSRC). At the launch, the deputy minister of social development, Ganief Hendricks, noted that the Covid-19 pandemic had exposed serious gaps in social protection systems across all countries, including South Africa.

“On the positive, the pandemic has made it possible for us to begin to open up national discourse on policy choices that were long overdue, including the universal basic income grant. That is what makes the release of this publication so crucial and timely as we build back better,” he said.

He added that the time had come for researchers to stop asking the government to do certain things, and rather “tell [the government] what to do”.

“Our President is itching for you to tell him, for example, ‘Introduce a basic income grant’. You’re not telling us, you’re asking — and we need that paradigm shift so that we can move and introduce the basic income grant,” said Hendricks.

Read more: Universal Basic Income urgently needed to kick-start SA economy — Social Policy Initiative

The Social Security Review Volume 2 explores different aspects of social security in times of crisis, including:

• The need for extending social protection to informal and migrant workers;


• The potential of technology to transform social security delivery and accessibility;


• The critical role of legal and policy frameworks in ensuring inclusive social security for migrants;


• The importance of a comprehensive social insurance model to address long-term social issues;


• The impact of social grants on child development, especially among vulnerable populations;


• The effectiveness of food assistance and cash grants in reaching intended recipients during crises;


• Innovative financing mechanisms and the potential for a basic income grant as part of South Africa’s social security future; and


• Enhancing the social protection system’s robustness and responsiveness through inclusiveness, financial and fiscal sustainability, and cost-effective optimisation of service delivery.

  Social Security in the Time of Covid by Ruffec on Scribd

Learning from the past

During a panel discussion involving several contributors to the Social Security Review Volume 2, HSRC research associate advocate Gary Pienaar said there was a massive demand for the Social Relief of Distress (SRD) grant that was introduced during the Covid-19 pandemic.

“Almost eight million people applied. Within three months of the grant being made available, almost three million SRD grants had been paid out and … this was a tangible measure of the desperation,” he said.

Pienaar argued that through data from the University of Johannesburg and the HSRC’s Covid-19 Democracy Survey — an online, cross-sectional survey that was conducted during the pandemic — researchers were able to show that many South Africans supported a regular SRD grant, as well as the idea of making it permanent.

“There was consistently a majority … of around 70% in support of the SRD grant… We asked people then to think ahead about the support for a basic income grant when Covid-19 ends ... and that reached levels of even higher support, so up to 81%,” he said.

“People recognise that we have this triple burden of unemployment, poverty and inequality. This is aggravated by Covid. But what do we do afterwards? And I think there was a recognition across the board that there is a need for something to take [the SRD grant’s] place, and we’ve seen government responding to that by extending the SRD [grant] and slightly increasing it.”

Alex van den Heever, the chair of social security systems administration and management studies at the Wits School of Governance, spoke on his contributions to the publication around issues with South Africa’s social insurance system. He noted that the country’s social insurance framework, which encompasses the Compensation Fund, the Unemployment Insurance Fund and, to some degree, the Road Accident Fund and the Medical Bureau for Occupational Diseases, constituted less than 2% of GDP in terms of overall expenditure.

“Their coverage is quite minimal. They didn’t perform well during Covid in many respects, although a lot of programmes were directed through them,” he said.

“Part of what was not available in the social insurance environments was that our social insurance structures don’t have members as such; we don’t have registries that actually tell us who is entitled to benefits.

“They weren’t properly set up … for being able to direct emergency funding toward large parts of the country very rapidly. That slow pace of reform allowed much space for corruption … when you needed to do things urgently. Part of what we need to do going forward is modernise our social insurance system.”

Van den Heever emphasised that social insurance institutions needed to use current technology efficiently to “get people into registries” and “identify them more specifically”. Without this approach, he warned that the country was “stuck” with broad-based strategies that sometimes missed the mark, allowing funds to “seep upwards” to people who didn’t need them, while others who did need income went without.

“I can go back to certain of the social insurance structures we’ve got and we’re talking about the same approaches in 1995 as we are now. We can’t be adopting technology so slowly. Sassa [South African Social Security Agency] also needs to be continuously upgraded,” he said.

Daily Maverick asked the panel about a recent GroundUp report highlighting “massive fraud” in Sassa’s grant system, with allegations that fraudulent applications for the SRD grant were succeeding because of the institution’s weak IT system.

Mark Blecher, the chief director for health and social development in the National Treasury, said, “The SRD R350 grant was … an incredible development, in that it was the first grant that was essentially online. One would apply online, there would be big database cross-checks … so it almost points to the future of social grants. But what one’s seeing … is the unresolved weaknesses of the first online grant.

“It’s going to point to a lot of potential solutions of how we get our big data systems much bigger, much stronger… Part of that is social registries, part of it is biometrics, but there are other things to this.”

Read more: Economic growth can be stimulated in SA by affording basic income grant to poor

Finding funds

In explaining how the National Treasury managed to support the SRD grant and other interventions during the Covid-19 pandemic, Blecher said that the financing of the grant relied largely on the borrowing of funds.

“Whereas normally social security over the longer term would need increases in mandatory contributions or in taxation, in this case, because it was a huge ... disaster the funds had to be largely borrowed in the context of tax revenue declining massively,” said Blecher.

“That involved both concessional loans from bodies like the World Bank, for example, or others. That also involved taking out substantially higher bonds, which our asset and liability section does.”

The process involved significant reprioritisation of funds among government departments, said Blecher.

“The biggest area of government spending, [which is] growing massively, is interest payments. That’s actually growing … from the fourth to the third to the second to the highest area of government spending… What we’ve had [is that] interest in debt has risen over a decade or more, from 8.8% of the tax revenue we get in every year to 20% of the tax revenue we get in every year,” he said.

“That’s about a R200-billion increased spending in interest, and that also has squeezed out spending in the social sector and in other clusters.”

When looking at costing a more permanent SRD grant, Blecher said the government would need to consider “the balance between revenue or tax increases or new mandatory contributions, and how to control debt payments [or] interest payments”.

According to Hendricks, more than 8.5 million unemployed persons between the ages of 18 and 59 years receive the SRD grant.

“While some economic indicators show that we are on the recovery trajectory, one thing that is already very clear is that social protection is a buffer in times of crisis. One cannot imagine the severe poverty and destitution that our people would have experienced without the social protection and additional relief measures that were introduced at the height of the pandemic,” he said. DM