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"Govt can afford a basic income grant for the poor"

[South Africa] Road works programme targets vulnerable for employment.
East Cape Public Works

The South African government can provide a Basic Income Grant (BIG) to the poor by raising taxes, according to research commissioned by a coalition of civil society organisations.

Calling itself the BIG coalition, the body comprising the Congress of South African Trade Unions, the South African Council of Churches and Black Sash has been lobbying for a grant of at least R100 (about US $16) to be paid to the poor for several years.

A 2004 government report reviewing the impact of its policies since coming to power 10 years ago said one-third of all households in the country were living below the poverty line and the number of jobless people had increased to 4.3 million from 1.9 million in 1995.

"Our research, conducted by four economists, has found that BIG is affordable, and if R120 (about $20) is given out [per recipient] it will cost the fiscus between R10 [billion] and R22 billion [about $1 billion to $3 billion] a year," said Neil Coleman, a spokesperson for the coalition.

The government has publicly maintained that BIG would cost between R45 billion and R65 billion ($7 billion to $10 billion), according to Coleman. The government has also argued that it did not want to create a culture of dependency, preferring to create jobs through public works projects and strengthening income support by extending child support, pension and disability grants to more recipients.

The coalition has argued that over half the population needing support was not covered by the current system of social welfare grants and 21.9 million people would remain below the poverty line.

"A universal BIG of R100 [about US $16] a month would prevent people from falling into destitution, but it would not be sufficient to discourage people from looking for ways to earn additional income. To the contrary, research demonstrates that success in job seeking is strongly correlated to income: as income rises, people tend to look for work more vigorously and are more likely to find it. Even a small, stable income enables poor households to take the sort of risks inherent in job seeking and entrepreneurship," the coalition noted.

Coleman said they intended to use the research to lobby government through the National Economic Development and Labour Council, a platform comprising business, government and labour that helps to resolve issues between the three sectors.

The South African government is currently preparing a White Paper on the social welfare system. "We hope our research will influence it to consider BIG," Coleman added.

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