NEDLAC Community Constituency: Submission to Government on the Extension of Covid- 19 Social Cash Transfer Grants to the end of the Fiscal Year (31 March 2021
Covid- 19 is a global pandemic whose advent was unpredicted and whose impact unprecedented.
The impact threatens our social, economic and political well-being.
Tough choices have to be made daily about the health of our nations or the health of our economies. We also have to weigh up the cost of allocation of monies now, versus future indebtedness, of the cost of sustaining people against the orthodox theories of economic sustainability, the danger of doing too much against the danger of not doing enough.
These times are unknown and orthodox theories bring no certainty or comfort.
Community Constituency makes this submission to government as the NEDLAC social partner representing members of broader communities in South Africa including but not limited to the Youth (SAYC), Women (WNC), the Co-operative movement (SANACO), people living with disabilities (DPSA), Civics (SANCO) and the Financial Sector Campaigns Coalition.
South Africa’s Economic and Humanitarian Crisis in the face of Unemployment:
South Africa’s economy was in recession for two quarters before the impact of Covid-19. For millions of people this was directly felt through the increases in lack of formal employment. Unemployment was rising, and the majority of the unemployed (53%) did not have a matric, another third had only matric. The shifts in global production and supply chains and the structural change in the dominant sectors in our domestic economy clearly indicate that skills are at a premium, and unskilled labour can be sourced globally.
The recent Quarter Labour Force Survey showed an alarming trend. There was a disruption to the trajectories of increases to both the narrow and the broader definitions of employment before Covid- 19, we see a decrease in formal unemployment by 1,2 million to 10 million people, while 5 million more people became not economically active, swelling to 20,5 million people the number of people of working age not in the current labour force. The poor are delinking from the labour force, no longer trying to look for jobs and becoming increasingly disengaged with formal society. This is highly dangerous for our precarious existence.
Humanitarian Response: Extend the Current Covid- 19 Grants:
Social security is a constitutional right guaranteed in Section 27(1)(c) of the South African Constitution.
We know that there are no social security cash transfers for able bodied working age people between 18 and 59 years old. We also know empirically that the special Covid- 19 Social Relief of Distress grant and the special Covid- 19 Care givers grant had a SIGNIFICANT humanitarian impact on the levels of hunger, destitution and starvation in South Africa than any other policy impact.
According to the NIDS CRAM research released two weeks ago, nearly 13 million people received the SRoD grant of R350 and the Care givers grants of R500 (per recipient per month).
We know too that the reach of these grants does not cover the full number of destitute we know that the level of the grants falls below the current Food Poverty Line (which measure the amount of money required for the most minimum level of nutritional intake according to the World Health Organisation). We know that there are a number of applications of eligible people still pending for approval. And we know that the state is concerned about making the right choice as a government responsible for the well-being of all its people.
Our request as Community Constituency to Government is to extend the Covid-19 Social Relief of Distress and the Caregivers grants at the mounts of R350 per person per month until the end of this 2020/21 financial year.
As Community Constituency we represent people who are not employed, women who are responsible for the well-being of millions of South Africa’s children, people living with disabilities, and the youth who face staggering rates of unemployment. Our members include people who operate in the informal economy, creatively crafting their own livelihoods that advance our social economies and cooperatives. Our members contribute in ways unmeasured to the economy of our country and they strive at huge personal cost to feed their families and to keep the straining weave of our nation together.
We know that better solutions need to be found to addressing the current needs of South Africa and South Africans. We also know that there are many calls on the fiscus and many cautions against excessive spend.
What we argue is that what we are proposing is not excessive. The total cost of extending the Covid- 19 grant of R350 for five months to current recipients (5,2 million) will cost R9,8 billion, and R12,3 billion if this is extended to 7 million of the adult unemployed. To extend the current Care givers grant of R500 for 5 months will cost R17,8 billion. This would be a total of R30,1 billion for the five month period.
It is also a response that will provide some shock stimulus to our economy that is in intensive care. We have referred above to the fact that we will not be able to provide employment to all in South Africa in coming years. What we need to do is to provide wide -spread stimulus to our informal economy. This is what social grant income does as a multiplier, more rapidly and directly than anything else.
Ongoing NEDLAC engagements continue:
While Community Constituency has called for broader reforms to the Comprehensive Social Security System through our participation in NEDLAC, it is important to emphasise that this current extension is a humanitarian response to the Covid-19 impact, not a structural response to the pre-existing poverty and inequality levels.
We have concerns that we have raised in other forums about the amount of grants and the headcount cover. We have firm econometric evidence that shows that the active multiplier effect of increased grants amount would be part of the critical demand shock, with other state interventions, that can set us on a successful recovery and reconstruction trajectory and look forward to meeting with Government to put that case forward.
However, in the immediate, our concerns are centred on the extension of the Covid – 19 cash transfers. As Community Constituency we have tried to raise these concerns and this call for the last two months within the machinery provided through the NEDLAC Rapid Response Task Team. On 6 October we were advised by Government that they would not be engaging in this matter, which flies in the face of social dialogue. These are unprecedented times. We would rather err by openly sharing concerns with social partners, and specifically, with government. To not act now we believe would be disastrous. To not include this in the Economic Recovery Medium Term Budget Policy Statement would require a full legislative action.
Call for Government Commitment to Extend the Grants and to meet today to Discuss Details with Community Constituency and Civil Society Leaders:
We urgently ask that our call be met. We are also calling for a meeting today to discuss how this initiative will feed into other critical streams of the national economic recovery plan, together with a broader number of civil society organisations including labour federations, academic researchers and communities and social movements.