Coalition Statement: Guaranteed Income Security for All

Guaranteed Income Security for All

The people of South Africa can no longer be doomed to the seemingly unbreakable cycles of poverty in this country! Our people have shed their blood for equality and deserve to live lives of dignity! No one is disposable to the whims of economic models that do not serve the people! The economy belongs to all!

This document has been drafted by the Cash Transfers Subgroup of the C19 People’s Coalition, in consultation with a number of relevant community formations. We see this as a ‘living document’, providing a series of important observations and demands. We hope that this serves as a conversation-starter, an accessible reference, and a compelling distillation of the convergence of past and ongoing struggles in relation to income security in South Africa. While some of the details of the various calls for guaranteed income security in South Africa might differ, what all unequivocally agree on is that this can and should be implemented without any further delay. It is in this context that we hope for this Call to Action to galvanise the reformulation of a revitalised BIG Coalition in South Africa.

We demand the immediate implementation of a basic income guarantee! The need is so strikingly clear, and the practical options for implementation are so varied, its non-implementation is now unacceptable. The people of South Africa are hungry for change, and we have long had the tools to create it!

Context

The struggle for a basic income guarantee in South Africa has been a protracted one but the calls are only getting louder; with groups such as Black Sash,  Studies in Poverty and Inequality Institute (SPII), Alternative Information and Development Centre (AIDC), Co-operative and Policy Alternative Centre (COPAC), Assembly of the Unemployed, Cry of the Xcluded, and Concerned Africans Forum (CAF) all championing a basic income guarantee as essential for restoring respect and dignity to a people who have been systemically debilitated and impoverished for far too long.

Post-apartheid there were high hopes for liberation, including redistribution and increased access to opportunities and services, but these expectations were dampened by anti-poor interests justified by a macroeconomic orientation based on ‘fiscal discipline.’ This acted to de-emphasise the government’s obligations towards the poor and the unemployed, perpetually subjected to structural and intergenerational unemployment far beyond their control.

As the Department of Social Development noted in 2002 when investigating a basic income guarantee, “In developing countries, where stable full-time waged formal sector labour was never the norm, it is increasingly unlikely that it will become the norm.” Two decades later, unemployment and precarious work have only increased, with 54% of full-time employees below the working-poor line of R5 180 per month (in 2020 Rands). One in every two people remains below the official poverty line.

In the context of massive unemployment- further worsened by precarious employment at poverty wages- an exclusive reliance on market activation for the upliftment of the people reproduces inequality and deprivation. The trend for formal labour to define hierarchies of citizenship and rights needs to be challenged in a context where only a shrinking minority have access to stable wage jobs of a decent standard.

The poverty and inequality in our society is directly related to the dispossessions inflicted by colonialism and Apartheid, which persists today through the continued exploitation of black people. Black womxn, in particular, have faced some of the heaviest burdens of structural inequality. A guaranteed income security for all would begin to recognise and address these injustices, as well as the daily injustice of unrecognised and unpaid forms of labour (shouldered to a large degree by black womxn) which socially reproduce the productive capacity of the economy and is valued at 10-50% of GDP.

A basic income guarantee is necessary to fulfil every person’s right to food security, and to help them access other rights such as healthcare, housing, and schooling. South Africa requires a permanent solution to poverty for as long as full employment remains unachievable.

The current grant system:

The current social grant system completely excludes all South Africans between the ages of 18 and 59. The Child Support Grant covers those below 18, and the Old Age Pension covers those above 60. While these grants are important in directly and indirectly enabling many to survive, they leave out about 10 million people who have no formal job due to South Africa’s extraordinarily high levels of unemployment. This system is founded on a misleading judgement that social grants should go only to the ‘the deserving poor,’ with unemployed people of working age being seen as undeserving. People of working age in South Africa are not unemployed because they do not want to work, but because of deep, structural socio-economic problems. To treat these working aged adults as ‘undeserving’ is a massive injustice!

The amounts of the current grants are also incredibly problematic, for example; the child support is only R445 – despite it being the most effective grant available to reduce food poverty. With severe levels of nutritional stunting in South African children, the child support grant should, at the very least, be raised to the food poverty line of R580.

The current amount of R350 for the Social Relief of Distress (SroD) Grant , sometimes referred to as the ‘Covid Grant,’ is also far too low and ensured for a much too limited period of only 6 months (this is especially true in the context of how long we will still have to navigate the difficulties of a COVID-19).

Both in South Africa and globally, this moment is being taken up as an important opportunity for the realisation of a basic income guarantee. The Covid Grant should be the first step towards a permanent basic income guarantee for those previously ignored by the grant system.

Summary of main options for guaranteeing income security

There are many ways to provide guaranteed income security. It could be via a basic income guarantee – a regular payment to every resident, with no conditions or targeting; a social assistance grant given to all adults aged 18-59 who need it (an extension of the special ‘Covid grant’); or a job guarantee that offers anyone willing and able to work a community job at a minimum wage.

	Who gets it?	How much?	Total cost	% in Food Poverty
		(R’ p/m)	(R’ bn p/a)	No CSG	Plus CSG
Basic Income Guarantee	All adults aged 18-59 (32 million).	R1,280	R492	0%	0%
Social Assistance grant	Continuation of Special Covid Grant: All adults aged 18-59 w/ no grant or formal job (10 million)	R1,280	R154	5%	4%
Job Guarantee	Minimum wage for 100 days of work to all unemployed (10 million). If no work is provided, wages are still paid.	R1,330	R160	5%	4%

Notes: The poverty line is R1,280 per month. The food poverty line is R580. In 2017, 14% had income per person less than R580. ‘Food poverty’ refers to the percentage of people living under the food poverty line if the grant is implemented. CSG food poverty includes a R140 top up to the Child Support Grant (new grant value of R580), which would cost an extra R21 billion p/a. Calculations by authors using NIDS (2017).

Basic Income Guarantee

Context. During the campaigns from the late 1990s and early 2000s around the BIG it was understood that high earners would pay back double the amount of the grant in the form of a ‘solidarity’ tax. The 2001 Taylor Committee recommended a grant for those who are still currently excluded. The government opposed this, arguing it was unaffordable; instead the policy response was job creation through public works programmes. The Taylor Commission recommendation was not followed.

How it works. All adults aged 18-59 qualify. About 32 million people would receive a monthly payment.

Current proposals. The Assembly of Unemployed has proposed an amount of R1,280 (poverty line), with similar proposals by Black Sash. This would cost nearly R500 billion and reduce the food poverty rate to 0%. Alternatively, a basic income guarantee matching the food poverty line (R580) would cost R223 billion and reduce the food poverty rate to 4.4%.  As a comparison, sharing all of the country’s income among adults aged 18-59 only would give about R12,500 per person per month, while including children and pensioners too would give about R7,000 per person per month.

Advantages. The policy is universal and unconditional (i.e. it goes to everyone no matter who you are or what you do). This means the administrative costs of ‘means testing’ and the onerous reporting requirements on the poor are avoided. It would ensure a basic income for all adults, which is understood as a minimum rightful share of income in our society.

Disadvantages. Many people critique it for being costly and for people who already have money. Part of the cost can be recovered through offsetting tax increases on the 2 million taxpayers who receive the grant but don’t need it. This means it both costs less and ends up helping only those who really need it. (For the R1,280 grant, this would recover R30 billion of the R500 billion).

Social Assistance Grant

How it works. Only given to adults aged 18-59 with no income or formal employment. The ‘Covid Grant’ is an immediate relief measure envisioned to last 6 months that targets this category of people between 18-59, however it currently excludes people who receive any other social grant; including the Child Support Grant and/or the Old Age Grant. While further restrictions could apply, it is also possible to structure this grant in such a way that caregivers (who receive the Child Support Grant) are eligible.

Current proposals. A continuation of the current ‘Covid Grant’ beyond the duration of the lockdown and with a significant monetary increase. Note there are currently 8 million estimated recipients, based on unclear criteria. It would cost about R150 billion per year, and reduce the food poverty rate to 5%.

Advantages. Administrative costs are potentially lower because this proposed continuation would be able to utilise existing infrastructure already established for rolling out this grant during the lockdown.

Disadvantages. Those who receive any other grant are currently excluded; particularly problematic in relation to womxn caregivers if not complemented by an increase to the Child Support Grant. The selectivity of the grant may decrease broad social support and be difficult to implement.

Job Guarantee

Context. India has a jobs guarantee programme (NREGA), where a guaranteed wage of R250 (PPP) per day for 100 days is paid to 50 million households. Work programmes include infrastructure projects and are organized through local government. NREGA has successfully decreased poverty, but its merit against a BIG is debated.

How it works. Any working age adult who registers is guaranteed 100 days of work paid at minimum wage. If work is not provided, wages are paid anyway. An estimated 10 million people would receive it.

Current proposals. The SACP has proposed an “introduction of production subsidies destined for the poor and unemployed workers”, as well as aggressive expansion to public works programmes. It would cost about R160 billion per year, and reduce the food poverty rate to 4%.

Advantages. It is well-targeted to address the unemployment crisis by providing those left out from the current grant system with a guaranteed income (equivalent to R1,300 per month). It is partly self-financing if the work is productive, such as providing protective equipment like masks during the lockdown (as proposed in India). Productive work may create durable assets for long term fixed investments, community development and care, such as building parks and assisting the elderly. If implemented well, it can help build skills.

Disadvantages. Administrative costs will likely be high and allow corruption. The state may struggle to provide productive work over the long term given the structural unemployment problem. Work through this programme may crowd out other productive work. This form of guaranteed income would remain linked to “productive” work, rather than given as a rightful share of society’s income.

How would it be financed?

Financing a guaranteed income for all will require the state to raise significant tax revenues. There are, however, many ways to think about raising tax revenues. One, and perhaps the most obvious, is through increasing income or wealth taxes to redistribute wealth from the rich and middle classes to the poor. An annual progressive wealth tax between 3 and 7 percent could raise R143 billion. A 10% increase in personal income tax on the top 2% of earners could raise up to R40 billion. Anti-tax avoidance measures will have to be substantially reinforced. A guaranteed basic income could also be financed through a new or increased  corporate tax and/or a natural resource or carbon tax that redistribute money that would otherwise ultimately be profits that go to shareholders or executives. Apart from direct redistribution, the central bank buying bonds directly from the government at 0% interest could free up large amounts currently devoted to interest payments.

The financing of all of these grants has benefits not reflected in the costing above. Studies show, for example, that even a small but stable minimum income may motivate and enable people to look for employment, encourage better schooling and improve health outcomes (both in crises-preventative and health constitutive ways), including mental health (an essential aspect when considering that the marginalised majority have been persistently subjected to the immense and ongoing  traumas of poverty and inequality in South Africa).

South Africa’s experience with fiscal consolidation and the global experience of austerity is lower economic growth, more unemployment and poverty and rising inequality. Redistributive measures are a positive way to support inclusive economic growth while repairing the social fabric.

Social spending is often dismissed as unsustainable or wasteful expenditure, being provided to an ‘unproductive’ poor at the expense of some other ‘more important’ investment. We have run out of patience for this unimaginably harmful and ongoing mischaracterisation! While the economic benefits that income security creates are, by now, well documented (including, for example, increasing local demand, which expands local production and markets; generating growth to small and medium enterprises and; acting as an enabler for people to access credit), we do not think that these economic arguments should be centered: it is about time that the logic of the market be deprioritised in favour of the moral imperative to provide urgent and necessary social assistance!

Strategic vision of Guaranteed Income Security

The amounts suggested for the basic income guarantee above are insufficient. The proposals reflect strategic demands constrained by political will and the budget constraints imposed by the capitalist economic system.

In the long term, we need to have a fuller social justice conception of redistribution (the Cash Transfers Subgroup is currently working to explore the details of this in a document related to this one). It needs to include collective decision making, sharing in all natural resources in a way that holds climate justice as central, sharing the labour of care, and economic redistribution. It needs to include migrants, those living with disabilities, queer people and all those who are excluded in multiple ways. Guaranteed Income Security (a Basic Income Guarantee) must be complemented by strong, accessible public services, affordable housing and universal healthcare. It is not separate from the critical need for a framework for the creation of value that is underpinned by human development, radical and targeted industrial policy, service delivery and functioning state-owned enterprises.

Immediate demand: Transparency and Access to the Covid Grant!

For now, we demand better delivery of the Covid grant. SASSA has already put at risk millions of vulnerable people through poor disbursement of grants. In a statement from several community organizations, we demand:

• A larger grant. R350 is far below what people need to survive.
• Dropping exclusion criteria, especially caregivers of children and migrants.
• Rollout of communication strategy: the application process is inaccessible.

We need to come together to ensure that a Guaranteed Income for All (Basic Income Guarantee) no longer remains a discussion point but is implemented with immediate effect.