By Kelle Howson and Neil Coleman
See original post here.
Social protection in the post-pandemic period
The early months of the pandemic witnessed a wave of emergency social protection measures, put in place by governments around the world to protect vulnerable populations from income insecurity resulting from lockdowns and labour market disruptions. Of the approximately 1,400 such programmes, a large proportion comprised both ‘one-off’ or ‘ongoing’ cash transfers to individuals or households, to assist with meeting basic needs, and to stimulate the economy.
This led many observers to hope that the pandemic may usher in a new and lasting paradigm in social protection—that temporary measures would demonstrate the importance and benefits of expanded social protection and strengthen the case for permanent comprehensive social protection floors (as set out in International Labour Organization Recommendation No. 202, 2012).
However, more than three years on from the onset of the pandemic, these hopes have been mostly dashed, as very few COVID-19 emergency cash transfers have been institutionalised. Many governments—especially those of low and middle-income countries with particularly burdensome debt obligations—have cut social spending and reverted to austerity frameworks.
Background to basic income debates in South Africa
One notable exception to this trend is South Africa’s COVID-19 Social Relief of Distress (SRD) grant. Although austerity remains in place in South Africa, the SRD grant (aside from being temporarily withdrawn in 2021) has endured through the pandemic, and looks set to be transformed into a permanent form of basic income.
This is in large part the result of sustained campaigns from civil society to secure a universal basic income in South Africa, which date back to South Africa’s 1998 Jobs Summit, but have gained renewed momentum in the wake of COVID, and the introduction of the SRD grant.
Importantly, whilst many countries are piloting basic income schemes to better understand their suitability in distinct contexts, South Africa has moved beyond the evidence-gathering phase. Drawing on the existing body of international evidence, as well as recent experience with the SRD grant, the policy focus is now on interventions at the national scale.
This is commensurate with the depth of South Africa’s crisis. Despite being classified as an upper-middle-income country, South Africa is gripped by structural poverty and economic exclusion which threatens social stability. The unemployment rate (including discouraged work seekers) stood at 42.1% in the second quarter of 2023. Of those still actively seeking work, 77.2% are long-term unemployed, underscoring the structural nature of labour market exclusion. Over 32% of people of working age have no income (including from government grants) and rely on cash or in-kind support from friends and relatives. 20.6% of households are food insecure, and 20.9% send a family member to beg for food on a regular basis. According to the World Bank Gini Index, South Africa is the most unequal country in the world.
South Africa is often said to have a well-developed social assistance framework compared to other middle-income countries. Its Child Support Grant (CSG) and Older Persons Grant (OPG) are considered to have low rates of exclusion, and have been shown to contribute significantly to mitigating poverty. However, able-bodied adults between 18 and 60 have no access to permanent, non-contributory social assistance. This leaves a gap in the country’s social protection system which renders millions vulnerable to starvation.
With the 2024 national election coming into view, South Africa is in a moment of political possibility with respect to social protection. Basic income is already becoming a key election issue, with two parties so far pledging to introduce a basic income grant if elected. Senior figures in the governing African National Congress including President Cyril Ramaphosa have indicated that plans are already underway to develop a system of basic income, with Department of Social Development and ANC policy referencing the need to set the grant at a level which provides dignity, as well as the need for universal eligibility, though details and timelines have not been forthcoming.
This could set South Africa on a pioneering path, not only with respect to realising socio economic rights, but also in terms of alternative approaches to development which centre redistribution and economic inclusion.
However, basic income remains hotly contested in policy circles, with opponents (most notably policy makers within the National Treasury) questioning its feasibility and affordability. Although it is highly possible that some form of basic income will be in place in South Africa within the next two years or so, the great risk of this moment of contestation is the introduction of a severely compromised version of basic income, with limited coverage, inadequate benefits, and/or the imposition of tight conditionalities on beneficiaries.
Moreover, if basic income is introduced while austerity remains in place, it threatens to displace other social spending, or utilise regressive financing measures which would undermine its benefits in terms of poverty alleviation and inclusive development. Even worse, the drums of hyper austerity are currently beating, and there is a real threat that the Minister of Finance and Treasury will attempt to terminate the SRD grant in 2024.
Many basic income proponents in South Africa are all too aware that basic income is not necessarily an inherently radical demand, and that its radical potential is contingent on specific features of design and financing. However, in a context of widespread hunger and economic stagnation, many on the left are uniting behind the proposal as a realisable strategy for meeting immediate basic needs, as well as a foundation for a progressive developmental agenda.
Civil society and major trade union confederations, largely under the banner of the Universal Basic Income Coalition (UBIC), continues to push for the progressive realisation of a universal basic income for those aged from 18 to 59, indexed to the value of the national poverty lines, and free of behavioural conditionalities. This is in line with provisions in South Africa’s Constitution, which obligates the government to progressively realise the right to social assistance. The Constitution has formed a basis for advocacy and litigation to secure expanded social assistance.
Notably, the Congress of South African Trade Unions and the South African Federation of Trade Unions have staunchly supported the basic income grant campaign. The trade union movement internationally has had a complicated relationship with UBI, as it is sometimes feared that it could undermine workers’ interests by subsidising labour costs for employers, or that it diverts progressive energies away from a focus on decent work for all. However, in South Africa, due to the extreme rates of working poverty, precarity and unemployment, there is a broad acceptance among the trade union movement that basic income is in the interests of the working class. In addition, low income workers as well as unpaid carers (predominantly women) are put in the position of filling existing gaps in the social safety net. Many adults survive on remittances, or cash or in kind donations from friends and relatives. Many workers would be relieved of some of the burden of financially supporting extended family by a basic income grant, alongside benefiting themselves from a minimum income guarantee.
Multiple modelling exercises have indicated that progressive realisation of universal basic income is both fiscally feasible in South Africa, and—if funded by additional progressive taxation or other non-regressive financing measures—will have significant impacts on poverty and inequality alleviation, and growth.
The Social Relief of Distress grant—paving the way for universal basic income?
The SRD grant provides R350 or around £15 (equal to 46% of the extreme, or ‘food’ poverty line) per month to adults without income. Despite its profound inadequacy, the grant has had documented socio economic benefits. 93% of recipients spend their SRD grant on food, and it is estimated to have prevented 2-2.8 million people entering into food poverty as a result of pandemic measures. It has also been shown to have had a stimulus effect on employment, and local economies. In the first year of receipt, it increased the likelihood of employment by 3 percentage points.
However, the grant has not been adjusted for inflation (let alone food inflation) since its introduction. In contrast to other social grants in South Africa, the administration of the grant has resulted in astronomical levels of unfair exclusion. Estimates of those theoretically eligible for the grant start at 16 million people. This corresponds almost exactly with the peak number of applications for the grant, in March 2022. However, in that month, only 10.9 million applications were approved. Research suggested that almost all exclusions were erroneous. Since then, further exclusionary procedures and provisions have been introduced. In May 2023 8.4 million people were approved for the grant, with 7.1 million actually receiving payment.
Barriers to access to the grant for rightful beneficiaries exist within systems of application, verification, payment and appeal. Applications can only be completed online—disadvantaging those without internet access. The grant imposes an extremely low means test of R624 per month—which is below the food poverty line. This is policed through monthly checks on applicants’ bank accounts which cannot distinguish between funds which constitute regular income and ad-hoc payments, donations, or funds held on behalf of others. Applicants are also screened against woefully inaccurate and out-of-date income tax and unemployment insurance databases. Payment systems are dysfunctional, effectively excluding unbanked people or those who opt to be paid in cash.
Finally the appeals process is essentially useless, as appellants are prohibited from submitting any supporting information for their appeal regarded as ‘new’ information, and so the process simply constitutes reviewing the original application again using the same inaccurate verification systems. In the recent months for which we have data, not a single appeal for a rejection on the grounds of failing the means test was upheld (out of 1.2-1.5 million appeals per month).
These drivers of exclusion are ultimately the result of an arbitrary budget cap imposed by National Treasury, which in 2023/24 only provides for 8.5 million people per month to receive the grant. In other words, they stem directly from austerity. The Department of Social Development has been forced to limit eligibility, and—even more egregious—find ways to prevent eligible people from accessing the grant.
This is now the subject of a major litigation brought by two organisations, the Institute for Economic Justice (to which the authors are affiliated) and #Pay The Grants, against the Department of Social Development and the South African Social Security Agency.
Conclusion
The President has stated that the “innovation” which has taken place in social grant systems in order to provide the SRD grant will form the basis for introducing the future basic income grant. While the President’s commitment to transition to a permanent system of basic income support is a significant victory, we need to avoid institutionalising the SRD design flaws which have been so exclusionary.
It is critical that these unjust provisions and processes are not carried through into the new framework. It is further vital that the wider austerity framework is challenged, and that basic income is not financed through regressive taxes or spending cuts. The IEJ and others have put forward proposals outlining alternative ways in which a UBI could be financed.
This is where the battle lines are currently drawn, and it is this struggle which will ultimately determine whether we see a redistributive universal basic income within the next decade. Although it is fiercely opposed by conservative forces, who seek to hollow out and undermine the demand, basic income debates in South Africa have finally moved beyond the question of “if”… to arrive at that of “how” and “when”.
