Basic income grant in South Africa won’t stop people looking for work: chairperson

The introduction of a new basic income grant will not lead to ‘syndromic dependency’ and most South Africans are not unemployed by choice, says Wits professor and chairperson of the Expert Panel on Basic Income Support, Alex van den Heever.

A panel headed by Van den Heever has recommended that the country gradually implement a basic income grant, beginning with the institutionalisation of a monthly welfare payment introduced last year to offset damage wrought by the coronavirus pandemic.

The panel was appointed by the Department of Social Development, the International Labor Organization and the United Nations-backed Joint Sustainable Development Goals Fund.

Speaking to SABC News, van den Heever said there are many instances in which people require some form of income support and you don’t necessarily expect them to be working. This includes looking after or bringing up children or because they have become unemployed for reasons beyond their control.

“You will always have people who abuse or take advantage of some kind of income support. But all the evidence shows that is a very small minority of the overall picture. Those are anecdotal instances as opposed to systematic effects on the economy.

“You don’t find widespread unemployment in countries that have very comprehensive social security schemes – in fact, you have very high productivity employment.”

Van den Heever said that creating extreme penalties for losing income makes it harder for people to exercise agency and re-enter the workforce. He added that the basic income grant will not create syndromic dependence on the state to the point where people give up jobs to instead collect grants.

“There is an enormous amount of evidence on this and none of it shows that you will have systemic negative effects from basic income support. Certainly, you might have it at very high support levels but not at R350 a month or anything up to the upper-bound poverty levels (R1,300 a month).”

A panel of economic advisers appointed by South African President Cyril Ramaphosa is divided over whether the country should implement a basic income grant to ease poverty in the world’s most unequal nation, Bloomberg reported.

A report by 11 of the about 18 advisers cautioning the president against implementing such a program – saying it would be a “policy error” that would curb growth – was leaked last week. A separate report by four other advisers, seen by Bloomberg, warns that not doing so could lead to a repeat of the July 2021 riots and looting in which more than 350 people died.

“The state cannot turn a blind eye to this simmering discontent,” the authors of the latter report said. They called for the state to extend protections for the vulnerable beyond existing social grants.

The divisions within the Presidential Economic Advisory Council mirror those in government.

While Finance Minister Enoch Godongwana and his predecessor, Tito Mboweni, have said an income grant is currently unaffordable, Ramaphosa and Social Development Minister Lindiwe Zulu have said the measure – which would be the biggest of its kind globally if implemented – should be considered to alleviate poverty.

Business organisations have said it would be ill-advised.

On Saturday, Ramaphosa’s office acknowledged the leak of the initial report, saying it was being used to “support various agendas.”

The advisers “hold a range of diverse and nuanced views” that are valued by the president, his office said. The Sunday Times newspaper earlier reported on the second document.

South Africa, which at 3.3% of gross domestic product allocates a greater proportion of its revenue to welfare than most countries, is projected to spend R222 billion ($14.3 billion) on social grants in the year through February. More than 18 million people, or one in three South Africans, receive monthly payments, mostly in the form of pensions or child support.

Expanding welfare is seen as the ruling African National Congress’s single biggest achievement in tackling inequality. There is no permanent provision for the unemployed. More than a third of South Africans are jobless and the figure rises to almost 80% among those aged 18 to 24.

Calls for the introduction of an income grant from civil society organizations and labour unions have increased after the government agreed to a temporary R350 monthly payment to the unemployed to mitigate the impact of the Covid-19 pandemic.

With further reporting by Bloomberg.