Unions want a basic income grant in South Africa from next year

 ·23 Aug 2021

Organised labour has called for the permanent introduction of a basic income grant in South Africa from 2022.

The Congress of South African Trade Unions (Cosatu), National Congress of Trade Unions (Nactu) and the Federation of Unions of South Africa (Fedusa) held their mid-year Nedlac organised labour school this week to assess progress on the implementation of key policy interventions in South Africa.

In a post-meeting statement, the unions welcomed the reinstatement of the special R350 Covid-19 grant until March 2022 and said that this should be the first step towards a universal income.

“It must now be made permanent and be used as a foundation for a basic income grant.

“It must be extended beyond March 2022 and adjusted in line with the food poverty level. The government needs to provide for its extension and enhancement in the October medium-term budget policy statement.”

The push for a universal income comes after the Department of Social Development published a green paper proposing the introduction of a basic income grant fund through additional taxes.

The department said that the government has been severely criticised for the value of the Covid-19 R350 social relief of distress grant.

While many appreciated the Covid relief, being 40% below the poverty line, it makes a tiny dent as many people are still experiencing hunger and starvation, it said.

“The options for the value thus depend on what objectives the state would like to achieve first, including, inter alia: reducing hunger, reducing poverty and improving the standard of living of our people.”

The green paper proposes the following options, depending on what objectives government would like to achieve first:

  • Reduce hunger – With this option, the grant value would have to be around the Food Poverty Line (FPL). As of the 2020 adjustments, this is R585 a month.
  • Reduce poverty – This option would require the grant value to be pitched around the lower-bound poverty line (LBPL). As of the 2020 adjustments, this is R840 a month.
  • Improve people’s standard of living –  In this case, the value should be significantly higher, but at least starting at the upper-bound poverty line (UBPL). As of the 2020 adjustments, this is R1,268 a month.

“Studies done on a decent standard of living suggests income of around R7,500 per person, per month. This is an aspirational value that government should strive to achieve through a mix of transfers, labour and economic policies,” the department said.

A microsimulation for universal income support at the level of the food poverty line (R585) suggests that the financial cost will be approximately R200 billion and will require a 10-percentage point increase on income taxes.

“At face value, these amounts appear to be astronomically high and even impossible,” the department said.

“For the majority of the population, depending on the level of the transfer, it is likely that the benefit received will be larger than their increase in taxes.

“The wealthiest deciles of the population will only see a slight reduction in income on average, and the impact of this may be reduced if phased in over a period of time.”

Read: Food items you are paying a lot more for in South Africa right now

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