We need a real commitment to poverty relief’s BIG idea, not more talk from the ANC
* This is an extended version of the article published in the Sunday Times on January 17 2020
In his January 8 speech, President Cyril Ramaphosa committed the ANC to “intensify other poverty alleviation measures alongside the economic recovery. This year, the ANC, government and broader society will need to continue discussions on the desirability and viability of a basic income grant to provide a social safety net to the poor.”
Despite the window dressing, there is no evidence that the ruling party is any more committed to the introduction of a basic income grant than before.
What is a basic income grant?
It is very important to ask this fundamental question. Lack of clarification can have a whole room in apparent agreement around very different basic proposals. As used by most progressive thinkers, a Universal Basic Income Grant (BIG) or sometimes a UBI (Universal Basic income) refers to a legislated unconditional regular cash payment to all people of a set category (such as all residents of a country), funded through the fiscus.
It is in other words a certain income that is received by all people, regardless of their income, their gender, their age, and whether they have children. Most of it is recouped from tax paying people through specific tax instruments, but paying to all reduces errors of exclusion and massively cuts back on administrative costs of applying means tests.
Guaranteed access to an acceptable standard of living is a guarantee that holds together all modern human rights social contracts. From the 1948 UN Universal Declaration of Human Rights to the 1966 International Covenant on Economic, Social and Cultural Rights, access to an adequate or decent standard of living was seen as core to society. In the South African constitution of 1996 this is embodied in the inalienable right to dignity of all (Section 10).
The absence of a right to a fairly decent life rubbishes the concept in fact of a social contract. Social contract theory, going back to Rousseau’s 1762 statement, is premised on the fact that a person respects the constraints a society places on their right to take and do what they wish, through the guarantee of some basic security and wellbeing.
In our modern social contracts of the South African constitution, this guarantee finds further expression in the justiciable right of access to social security, including state-funded social assistance for the poor.
Returning to the concept of a BIG: it is quite rare as a construct, in that it is welcomed by those on the left as well as the right of the political spectrum. Right-wingers embrace the idea of curtailing the state by making available to citizens a payment to enable them to buy in private for-profit aspects of the social wage, such as education, health care, security and the like.
Small state, maximum private choice and profits for the service provider. For those on the left, a BIG would mean that all citizens would be free from the worry of providing for their basic needs, that a society will thrive when people can use their abilities as optimally efficient members of society rather than having to use all their wits and energy to scrape enough, daily, to survive.
In the days and decades after the drafting of the UN Declaration of Human Rights, the concept of full employment was a target that developed countries pursued, much as we now pursue low inflation. Policies were created around ensuring that people had access to jobs. State support was made available for those who, for whatever reason, were not able to access a job, to ensure the stability of the society through the social contract.
In a post-Fordist world, surfing on the crest of the 4th Industrial Revolution, full employment is no longer a standard to which countries commit, and that is why social security has become far more important to guarantee stable social reproduction as market – friendly policies deepen inequalities both within and between countries.
In rising to the challenge in this critical Covid time of adopting policies that seek to “build back better”, we need to be very honest about the need to improve where we were. In March 2020, we were in the second quarter of an economic recession, 11 million people out of a labour force of 23 million people were employed and we were the most unequal country in the world according to both income and wealth measures.
Fifty-five percent of the 7 million formally unemployed had less than a matric, and a further 35% of the unemployed just had matric. Seventy percent of the unemployed were in long term unemployment, with fading hopes of finding a job. Three million people wandered in some halfway purgatory of “discouraged workseeker”, being neither employed nor unemployed, but not having the faith or the wherewithal to look for a job.
In that pre-Covid time, more than half the population fell below the upper bound poverty line and a quarter of our people lived below a crude starvation measure of the Food Poverty Line. According to the (most recent) 2019 General Household Survey, 7 million households survived on less than R2,500 per month, while 3.1 million households consumed more than R10,000 per month.
In this same survey, only 55% of households cited salaries or wages as their primary source of income. Jobs provide income for just over half of our households, and yet our social security income replacement policies are still built on the notion of full adult employment. Paths of mobility flowed from the core to the periphery of our two-nation state, not the other way around.
This was the state of our nation before the destruction of Covid-19 and the impact of the lockdown restrictions that the state imposed in its desperate attempt to reduce potentially deadly infections.
According to a Covid-focused rapid response study undertaken by the National Income Dynamics Survey (Nids) in the Nids Cram wave analyses, 3 million jobs were lost between March and June 2020. By the second wave of the survey, the researchers reported that the jobs least likely to be regained were those occupied by back African low skilled women in rural areas – the most vulnerable.
The survey found that just under a quarter of South Africans demonstrated some mental health issues, and those facing extreme hunger were twice as likely to report depressive symptoms than others.
This is a most bleak diagnostic, and with the future impact of the more recent economic lockdowns, this will not be getting better. Is this then the time for the state to consider the adoption and implementation of a universal, fiscally funded BIG?
A BIG as a policy option is not new to South African political economy debates. A universal BIG lay at the heart of a 2002 report of a ministerially appointed committee of enquiry into a comprehensive social security system. Known as the Taylor Committee after its chair, Professor Viviene Taylor, the committee was set up to recommend ways of correcting a long-standing whites-only welfare state to accommodate the needs of all South Africans.
The report and recommendation were enthusiastically endorsed by the ANC’s alliance partner, Cosatu. As the largest trade union federation, Cosatu was aware of the rising levels of unemployment and working poverty of its members and the working class in general and that the industrial and macroeconomic policies of the ruling party were aggravating and not lessening poverty.
The moral endorsement of the BIG by the South African Council of Churches and the endorsement by the civil society organising coalition Sangoco came together under a civil society campaign for a BIG.
The leadership of the ruling party, however, appeared deaf to the crisis of growing poverty outside its doors. Since 2002, our levels of unemployment and poverty have deepened, as dystopic distribution allocative mechanisms continue to grow wealth for the elites. The state has never, however, deviated from its commitment to employing orthodox policies for unemployment and welfare designed by neoliberal governments of the Thatcher and Reagan era.
Decisionmakers shy from the notion that the state should actively correct market failures and underwrite general wellbeing through an actively redistributive tax and spend approach. They ignore that this approach shaped the thriving and stable social democracies built after WW2 - the time of the adoption of the UN Declaration of Human Rights.
It would be a good idea for the ANC to consider adopting a redistributive universal basic income. But before we get too carried away, we must remember that this is not the first time the ANC has considered the issue of a BIG. In December 2002 at the 51st National Conference of the ANC (Stellenbosch), the ANC resolved:
“(On Attacking Poverty and Comprehensive Social Security) (4) To continue to engage progressive forces campaigning for the introduction of the Basic Income Grant (BIG) on our approach of focusing on a comprehensive social security system consistent with a people-driven and people-centred developmental approach to poverty eradication.”
In other words, in 2002, despite the government report’s recommendations, the ANC did not think that a BIG would be as successful as its own approach to eradicating poverty, which appeared to have been expanded public works programmes which give adults a one-off chance to a “job opportunity” of a limited number of hours of manual labour.
The BIG issue was apparently raised from the floor by a number of provincial delegates who were seeing the impact of growing poverty. Ultimately, however, the conference resolved not to adopt a BIG, but to proceed to roll out sweat equity through public works programmes.
Despite the 2012 National Development Plan’s aim of eliminating poverty by 2030 through its preferred poverty reduction policies, even before Covid-19 poverty was growing as our social compact was withering.
The ANC has indeed been considering the proposal of a BIG and various permutations in internal deliberations. At odds with its revolutionary bent, sufficient of the leadership seems set in the Dickensian poorhouse mindset.
To receive state support adults have had to give sweat equity through millions of public works jobs. There is a steadfast refusal to recognise the empirical evidence from other countries, and econometric models, that demonstrate the economic multipliers and other stimulants that a BIG redistribution would deliver.
Towards alleviating the most brutal impact on the poor caused by the first national lockdowns last year, the president announced the temporary expansion of certain social cash grants. These included six months of R250 per month for six months to old age pensioners and people in receipt of disability grants (normally R1,860 per month, means tested to the poor).
An amount of R500 per month (notwithstanding the number of children being looked after) was available as a care giver’s grant – a new payment to people looking after children who get the monthly means tested R445 Child Support Grant. These special grants stopped in October 2020. The other new grant, known as the Social Relief of Distress Grant (SRoD), of R350 per month, was extended to January 2021.
The care givers grant and the SRoD grant represent the first time the state has included working age people in its grant policy. Even though the constitution guarantees access to everybody, the state has carried forward the apartheid exclusion of working age people from social grants. Then it made sense, as white adults were basically guaranteed a job for life.
To bring us back to the present. The ANC is now committed to “continue discussions on the desirability and viability of a basic income grant to provide a social safety net to the poor”.
This debate has also been going on at the National Economic Development and Labour Council (Nedlac) for the past nine-odd years.
It really does seem that a reasonable, let alone a caring or a human right-based state, would without delay commit to the immediate roll out of a universal basic income grant. The first step would be to stop the phasing out of the SRoD grant, reintroduce the care givers' grant and index the current amount of R350 to at least the starvation line of R561 per month, and pilot micro policies to capture and multiply the impact of this cash going into communities.
For the financing, look to monetary and fiscal policy innovations such as a wealth tax and quantitative easing if necessary, as other governments have. Put real commitments on the table, not more conversations.
The morality of our social contract has long worn away. Living a life that is “nasty, brutish and short” was for Thomas Hobbes, the English political philosopher in the mid 1600s, the mark of a life lived outside society. This is sadly the fate of the majority of South Africans for whom being a subject of our state offers nothing but the renunciation of the means to self help.
- Frye, who specialises in social policy, is a national minimum wage commissioner and the executive director of the Studies in Poverty and Inequality Institute. She writes in her personal capacity.
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