The Star: Universal income policy is vital

The Star: Universal income policy is vital

An Op-Ed by Isobel Frye

Isobel Frye, executive director at the Studies in Poverty and Inequality Institute (SPII), writes on a Universal policy:

STORES are stocking their aisles with the festive green and red of the annual Christmas spend. Advent calendars hiding chocolates symbolise the journey of the Magi to visit the babe in swaddling clothes, lying away in a manger. For Christians, the birth of the baby symbolised good news, rebirth and a union between the Divine and humanity. It is easy in South Africa to despair of finding a good news story right now. We feel besieged on all sides.

Corruption, crime and violence haunt our sleep. Good news seems like a strange phenomenon. But we seem reluctant to embrace a real good news story that has been put forward by a collective of bedfellows united not by ideology but by a vision of hope for the future. The story is the highly researched policy of a universal basic income guarantee – a monthly cash transfer indexed to the Upper Bound Poverty Line of R1 335.

It is a policy option that was first mooted in South Africa in 2002 and seems to be the only policy option on the table that could end formal poverty overnight. It would catalyse a groundswell of economic activities, turning around our receding economy and creating hope for a harmonious and prosperous future. Many have said that a universal income guarantee (BIG) is a massive thing to do, and surely we can adopt smaller, cheaper policies to solve our problems? The answer is no. South Africa is structurally flawed, and it needs an intervention to stabilise the country.

A universal BIG, as a stabiliser, would shoot out immediate roots to keep us together while we tackle the other necessary problems such as skills, corruption and energy. But it is difficult to accept that a sizeable intervention is necessary if we do not start from a clear reflection of the extent of the challenge. South Africa is the most unequal country in the world. This is why a few of us can ogle imported advent calendars while more than a quarter of our citizens are permanently living in starvation.

Fifteen million adults work, but 12 million people are unemployed, and a further 13 million are neither employed nor unemployed – not economically active. Apart from the temporary Social Relief of Distress grant of R350 a month, no able-bodied adult is eligible for an income grant, even though everyone has an unambiguous constitutional right to social assistance. The 18 million grants that well-meaning people suggest might be causing dependency are only for children and the elderly, and not for those meant to be working every day for a wage.

When people talk furiously against the idea of a universal basic income guarantee, what are they saying? “People must stop being lazy and get a job.” Statistics show that this is unlikely. Someone must show where the 25 million jobs are that people must take up. Fifty-two percent of the unemployed have not finished matric and 38% have only matric. Ninety percent of the unemployed have no developed skills to persuade a potential employer to hire them.

Would you? And each year, between 800 000 and 900 000 young people enter the labour market from school, eager to get a job, to become an adult, to start a family, buy a house and feel respected. We need to target the poorest of the poor – any form of targeting in a country that has such high levels of poverty and unemployment is unpalatable. If we try to target age cohorts as many say, through youth employment programmes, let us see who we are choosing and who we are rejecting.

Using the formal unemployment figures only, which includes people who are actively looking for a job every day, should we target giving an income to the 2.4 million unemployed 15 to 24-year-olds, so that they can get into the labour market with their dreams intact, or should we give it to the 4.6 million 25 to 34-year-olds, who are daily looking for the elusive job, their progression to adulthood permanently stayed as they remain dependent on others for their daily bread?

Or should we give it to the three million unemployed 35 to 44-year-olds who are hanging in there to look for jobs, or the one-and-a-half million unemployed people between 45 and 54-year-old, who are longing for the state old-age pension of R1 890 that they can get at 60 years, and yet who are regularly job hunting. Which of the people should we target and whom do we identify as undeserving of assistance? That is why a BIG must be universal, and the amount of the grant claimed back from the rich and middle class through the South African Revenue Service.

This should be about inclusion, not exclusion. We cannot afford to introduce a BIG – the gross annual cost of a universal BIG of the Upper Bound Poverty Line of R1 335 a person a month is around R500 billion. That is dramatically reduced once the grant amount is reclaimed from the rich and middle class. The money spent starts to make money as soon as it is received: the money circulates and creates immediate economic growth and jobs, and pays back to the fiscus. Formal retailers pay VAT and PAYE. Informal retail and services create livelihoods.

Economic activity is fuelled by the circulation of cash, and no one is left outside a vibrant, bustling and innovative economy. Retailers are setting up commercial gigs that tell of a good news tale from more than 2 000 years ago, promising redemption. But beneath the fluffy clouds and the cherubs co-exist the meanness of the stable and the imminent threat of persecution by the authorities. Recognising the enormous size of the economic exclusions in our unequal country is necessary to understand the magnitude of the stabilising intervention needed.

Source: The Star