Pandemic has exposed the problems with our economic system and reliance on wage work for economic security writes Hannah Dawson, Shaeera Kalla and Natasha Vally, in the Business Day. You can read the full piece here
In the face of the global pandemic and the resultant national lockdown, millions of people lost their jobs, income and support systems overnight. Most people in informal or precarious employment did not have any income protection. The latest data from the National Income Dynamics Study Coronavirus Rapid Mobile (Nids-Cram), which examined the socioeconomic impacts of the national lockdown, indicate devastating and persistent loss of up to half of all jobs. The study shows that the impact of the escalation of poverty and hunger has been most acutely felt by poor, black women.
In April 2020 the number of households that reported running out of money to buy food had more than doubled compared to the prior year. The government’s introduction of a temporary Covid-19 social relief of distress grant for people who lost incomes and did not qualify for other grants or unemployment insurance was a welcome, albeit inadequate, relief to the economic devastation caused by the coronavirus pandemic. The Covid-19 social relief of distress grant amount of R350 is below the (conservative) food poverty line of R585. While 4.3-million people received the grant, the same number, 62% of whom were unemployed in June, were still awaiting the outcome of their applications by the time of the second Nids-cram survey. Though the amount of the new grant is insufficient to cover basic food costs, and fewer people received it than are eligible, the Covid-19 social relief of distress grant along with top-ups to the other grants have proven to go a long way in assisting the most impoverished who were lucky enough to receive them. Even before the pandemic 13.7-million people living in SA did not have access to enough food. Economic distress was the norm for most people before the coronavirus outbreak and employment — particularly secure employment — was already scarce. The pandemic has worsened unemployment, inequality and poverty and imposed greater economic distress on the most vulnerable.
Yet, despite economic insecurity being permanent rather than temporary, the finance minister has insisted the Covid-19 social relief of distress grant and the top-ups remain temporary measures that are set to end at the end of October. This would be disastrous for the poor and a missed opportunity to challenge redistributive injustice.
The circumstances that necessitate a permanent basic income guarantee have long existed in SA. Four out of every 10 South Africans are out of work and one in every two people live below the poverty line. As the department of social development noted in 2002 when investigating a basic income guarantee, “in developing countries, where stable full-time waged formal sector labour was never the norm, it is unlikely that it will become the norm”. Two decades later unemployment and precarious work have increased, with SA’s expanded unemployment rate now at 42%. And of those who still have work, about 54% of full-time employees earn below the working-poverty line of R5,180 a month. These figures illustrate that even full-time employment does not guarantee economic security.
Calls for a basic income in SA and around the world have been renewed in light of the pandemic. There is a robust body of evidence that shows the positive impact of unconditional income guarantees in the form of cash transfers on health, reducing gender-based violence, and livelihoods.
Many in SA celebrated the Covid-19 grant as the first step towards a universal basic income. This optimism was understandable. The emergency grant was the first time unemployed adults between 18 and 59 years old have been included in the social grant system, something the ANC-government has been especially resistant to due to entrenched views on grant “dependency”. Contrary to stereotypes of “laziness”, grants have been important in supporting job seeking, for example by paying for childcare or transport for caregivers, or to buy stock to establish and run small businesses.
Research has shown that in SA money for social grants is largely spent on food, clothing, transport, health care and education, with grant recipients still eager to find work. The child-support grant, for example, has reduced hunger and improved school attendance and health. These long-term effects are widely known, however we are faced with a pressing reality: more than 4-million people are at risk of hunger if the new grant stops in October. This should be enough reason to ensure they continue.
The effects of the termination of the Covid-19 social relief of distress grant would be devastating and the government will have to be held accountable for the ensuing humanitarian crisis. The government’s reluctance to transform the Covid-19 grant into a permanent basic income is an indictment of our inability to understand and embrace the idea that there is no way out of this economic crisis if we continue to view wage labour as the main mechanism for income distribution.
It is critical to point out the crucial differences between the Covid-19 grant and a permanent basic income guarantee. A basic income is based on a belief that everyone deserves access to the resources required to meet a basic standard of living, and is designed to establish a baseline below which income should not be allowed to fall.
A true basic income guarantee is characterised by several principles. The first is that the basic income is universal, received by everybody as a right of citizenship. The second is that it is unconditional, received as a right regardless of whether a person performs work or meets certain conditions. The third is permanency, the income to cover essential living costs is paid every month no matter what.
It is also usually argued that basic income is an entitlement that is paid to individuals, according to his/her/their personal right, rather than to the designated head of a family unit. Basic income is also a redistributory measure. If you earn enough to not need it, you give it back to the collective pot when you pay your taxes. A reduction in inequality is a key objective of a basic income. A basic income is not a panacea for the problems we face in SA. But the advantages of a basic income guarantee in the current circumstances are clear.
It gets income directly to individuals who need it without recourse to employers or extensive means testing. It ensures income security for those in employment that is insecure and intermittent. It provides a basis for compensating the unpaid work within the family or community. It supplements and supports other forms of livelihoods. It provides women with more space to choose to leave violent relationships. It increases the bargaining power of workers and makes them less vulnerable to exploitation. It recognises the dignity and rights of all, irrespective of social or employment status. It gives effect to the state’s responsibility to progressively realise socioeconomic rights including the right to social security in section 27 of the constitution. It also delinks labour and income and thus counters the idea that for money to be deserved it needs to be earned through waged work.
The Covid-19 pandemic has exposed the problems with our economic system and our reliance on wage work as a source of economic security. It has also highlighted the urgent need for new forms of providing basic security and protection if we are to not recover from the pandemic but also combat structural unemployment, poverty and hunger.
It is shortsighted to view the recovery process as a dichotomy between curbing the spread of the pandemic and economic recovery. The act of recovery must acknowledge that something was deeply wrong with the way our economy and society was organised even before the pandemic, and inherent in this recovery must be the realisation that wage labour cannot provide economic security for all. It is time to acknowledge this and work towards providing a universal basic income guarantee.
The termination of the Covid-19 social relief of distress grant would lead to starvation and cause a humanitarian crisis that the government has a moral responsibility to avoid. As we demand the immediate extension of the Covid grant, we also know that a guaranteed basic income will not happen without mass mobilisation and people embracing that there can be no recovery without redistribution.
We need short-term and long-term measures — extend the Covid grant and build a basic income guarantee that offers a step towards redistributing wealth and providing income security.
• The authors are members of the #PayTheGrants campaign, which forms part of the C19 Peoples Coalition under the Cash Transfers group.