SA needs income support for 18- to 59-year-olds and Treasury can afford it, say experts

“Treasury always says it has to come from the taxpayer – it is a great way to make everyone nervous,” independent researcher Engenas Senona tells Daily Maverick. He is one of the three authors of a report, launched last week, which looked into how the R350 Social Relief of Distress (SRD) grant benefited unemployed adults during the Covid-19 lockdown.

The report, commissioned by the Black Sash, is titled Social Protection in a Time of Covid – Lessons for Basic Income Support. It should be noted that this research had everything to do with the push from civil society for income support for poor unemployed South Africans and nothing to do with the tragic “Free Jacob Zuma” looting that occurred just more than a week before the launch. 

In fact, the research is based largely on interviews with people who qualified for the SRD grant, conducted in September, October and November 2020. The Black Sash has for years been a loud voice in the call for a basic income grant (BIG) that would help unemployed South Africans between the age of 18 and 59. 

The report points out that the government is mandated by the Constitution “to implement social assistance where people have no means” and that “unemployment is not the result of the pandemic but structural disadvantage... Even after the post-apartheid transition... Despite all the lip service paid to job creation, South Africa never built an economy that could employ all the working-age citizens of the country.”

In 1997, a White Paper for Social Welfare called on South Africans “to participate in the development of an equitable, people-centred, democratic and appropriate social welfare system”.

Then in 2001, the then social development minister, Dr Zola Skweyiya, established the Committee of Inquiry into a Comprehensive Social Security System in South Africa. Its express purpose was to “examine the gaps in the current social security system and to make recommendations for the development of a\n comprehensive system”.

The committee’s report, Transforming the Present – Protecting the Future,  was delivered to the social development minister and Cabinet in March 2002 and found there was a dire need for a basic income grant because:

“The last vestiges of state racial discrimination have subsequently been removed, but a key underlying principle of the old system remains in place, i.e. 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 UIF payments) fall through a vast hole in the social safety net.

“Existing levels of poverty have reached unsustainable levels and, left unattended, have the potential to reverse democratic gains achieved since 1994. The urgent need to address deepening social exclusion and alienation of those households living in destitution cannot be ignored.”

The committee, 2o years ago, also clearly stated:

“The committee calls for a basic income grant for all South Africans but finds that the conditions for the immediate implementation of a BIG do not currently exist. It therefore suggests a phased-in approach... (2002-2006)... From 2006 to 2015 the BIG would be extended to all persons and the means test will fall away.”

The argument most often heard against income support – which is not the same as a universal grant, meaning it does not cover everyone aged 18 and older unilaterally – is that the government does not have the money and that it will come out of the taxpayer’s pocket. Independent researcher Senona, who worked for the Department of Social Development for almost a decade, says this does not have to be the case. Should Treasury fall short, the worst that would happen, according to his calculations, is that taxpayers in the top brackets might see a 1% to 2% increase in their taxes while people earning up to R350,000 per annum would be unaffected.

Senona says he started out in finance for the department (he is an economics graduate) but soon focused on the child support grant “and drafting a number of policies and proposals to amend that grant... I was mainly the numbers guy, besides policy. So I ended up costing and running numbers for the other grants as well including the older persons [grant].”

A number of these proposals “did not make it through – or beyond the [department] and Treasury discussions boardroom, but there were a number of proposals made and the BIG was always at the forefront... trying to ensure that there is coverage for everyone, particularly the 18- to 59-year-olds.”

This age group is important considering high unemployment – about 7.2 million South Africans are jobless. Stats SA announced in June 2021: “The official unemployment rate was 32,6% in the first quarter of 2021.” In addition, “the number of discouraged work seekers increased by 201,000”. These were people of employable age who had stopped looking for work as their efforts to find a job had been unsuccessful.

In February 2021, Statistician-General Risenga Maluleke said: “We are seeing that the proportion of people of working age, versus the proportion of those that are employed, is widening, meaning that the market is not creating sufficient jobs.”

The Covid-19 pandemic has only deepened poverty and joblessness as lockdowns led to people in low-wage jobs being unable to work. Many jobs also disappeared as some sectors were hit hard by long periods of inoperation. Many restaurants and small businesses not only lost staff, but had to close permanently.

Levels of joblessness and poverty in South Africa have not changed since the 2001 committee tasked to look into a BIG for the Department of Social Development affirmed that poverty and joblessness were so dire that the government should hurry up and institute a BIG.

The United Nations Human Development Report 2020 shows the extent of the growing global problem of hunger, and the negative effect the pandemic has had on the world: 

“... the number of people affected by hunger (undernourished people) has been increasing... In 2019 the number was 688 million, up 60 million in only five years. Estimates for 2020 (including the effect of the Covid-19 pandemic) range from 780 million to 829 million.”

It adds: “The Covid-19 pandemic has erased decades of progress in the female labour force participation rate.” 

The UN report echoes South African civil society’s concern around how the pandemic has worsened the economic situation of women, because “women and girls are disproportionately affected by shock (like the pandemic) because of their traditional roles and responsibilities, including around three-quarters of unpaid care work at home”.

The 1997 White Paper also shows that very little has changed for impoverished South Africans over the past quarter of a century, with women still bearing the brunt: “About a third (35,2%) of all South African households, amounting to 18 million people, are living in poverty. African households, households in rural areas, especially those headed by women in rural areas, are the most affected.”

The time has come for the government to carry out its constitutional mandate and assist the poor – this is the overwhelming message from civil society and the need is clear. But all the parties supporting a basic income grant or basic income support are no longer just clamouring for it, they are demanding it and sending the government financing solutions detailing how this support can be realised.

While the R350 Covid relief grant has been welcomed, the call is for it to be increased to the flood poverty line of R585 and become a permanent income support feature of South African life. The Institute for Economic Justice has also set out a number of ways in which South Africa could afford a universal basic income guarantee – it offers 19 recommendations for raising the money, including “the reduction of wasteful and irregular expenditure”, which could arguably be the number-one method. 

On August 2, Daily Maverick’s Mfeko Toyana wrote:

“Finance Minister Tito Mboweni and his team of top National Treasury officials were quick to add that the relief package, which includes the reinstatement of the monthly R350 social relief of distress (SRD) grant for the unemployed following significant pressure from civil society, would be temporary, budget neutral, and would not involve any additional borrowing.”  

Senona reacts to this with a wry chuckle: “Treasury is a master of stalling... they will say there is no money but when you open up the books then you realise... there is money, it’s just that you don’t want to do this.” DM