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Why South Africa needs to ensure income security beyond the pandemic

- Hannah J. Dawson and Elizaveta Fouksman

Economic distress was the norm for many before the coronavirus outbreak. The pandemic is an opportunity to provide an economically secure future for all.

A slew of countries ranging from the US to Brazil to Singapore to South Africa have decided to give people money in response to the economic crisis caused by the coronavirus pandemic.

While the amounts and details of the grants have varied, these governments have all made it clear that such payments are a short-term emergency response to an exceptional situation. But is the economic uncertainty caused by COVID-19 as exceptional as it seems? Might the reasons for guaranteeing economic security be valid even without a global pandemic?

Take the case of South Africa.

The government has decided to substantially bolster the social security net, directing R50 billion to those most acutely affected by the crisis over the next six months. This will be distributed in the form of increasing the current child support grant. In addition, pensions and disability grants will go up. But the biggest change is the introduction of a special “COVID-19 Social Relief of Distress grant” to be paid to people who are currently unemployed and do not receive any social grant or unemployment insurance for the next six months.

The new COVID-19 grant is the first time unemployed working-age adults are being included in the social grant system. Since 1994, the African National Congress government has resisted including them. And the resistance remains.

South Africa’s treasury has been busy making it clear that the new direct cash transfers are exceptional and temporary. At a recent media briefing, finance minister Tito Mboweni repeated again and again that the additional grants were temporary. His anxiety that people will expect the additional grants to remain in place – and that they will become “agitated” when the grants are taken away – is palpable.

Economic distress – before the pandemic

The name of the new grant shows exactly what it’s meant for. Calling it the COVID-19 Social Relief of Distress grant makes it clear that this is an emergency measure, here only to relieve the distress of COVID-19.

But economic distress was the norm for many before the coronavirus outbreak. Illness, ill-fortune and economic precarity existed long before this pandemic. The outbreak only makes the economic crisis broader, deeper and more visible.

An accident, a family death, or a delayed train can happen to anyone. But for the large number of people in South Africa who work for low wages without a proper contract, or who simply cannot find work at all, one of these events can be the tipping point into destitution.

They don’t need a pandemic to experience economic distress.

We would argue that South Africa needs more than emergency provisions such as a short-term new social grant or an emergency basic income. Rather, it needs a permanent form of economic security, be it in the form of a universal basic income that is given to all and then taxed back from those that don’t need it, or some other form of income guarantee for all.

Work does not provide economic security for all

Politicians are now willing to guarantee citizens some measure of economic security through the state because they cannot ask them to leave their homes and find economic security through work. But in a place like South Africa, finding economic security through wage labour was never the solution. It is just wishful thinking.

The statistics are stark: South Africa has an unemployment rate of nearly 40%. And of those lucky enough to have work, about 54% of full-time employees earn below the working-poor line of R4,125 a month.

The current economic distress brought on by the pandemic is not a brand new crisis. It’s an amplification of what was already reality for many South Africans. Indeed, it deepens economic insecurity around the world: globally, over 60% of workers are in “non-standard” employment – that means it’s precarious, short-term or informal.

The link between wage labour and economic security has long been a mirage in South Africa. Mass unemployment and precarity are neither new nor temporary. They are structural and enduring features of South Africa, further compounded as companies collapse and invest in labour-saving technologies. The need to provide economic security beyond the labour market has long been political reality.

Guaranteeing economic security

The idea that economic security should be a universal right – much like universal access to health care – has been around for centuries. At its core, it’s simply the argument that no matter who they are or what they do, every human being should be guaranteed enough resources to stay alive.

Ray van Heerden, a car guard, from the poverty-stricken shantytown of Munsieville, cannot work due to the lockdown. EFE-EPA/Kim Ludbrook

There are many ways to provide this kind of economic security. It could be via a social grant given to everyone who needs it. Or a negative income tax, a payment through the tax system that tops up the income of the poor to a basic level. Or it could be via a universal basic income – a regular payment to every resident, with no conditions or targeting.

Universal basic income has the advantage of simplicity. There’s no need for a bureaucracy to decide who should get it and who should not. And while many people critique it for being expensive and going to people who already have money, this is not the case. It goes to everyone, but is taxed back from the wealthy who don’t need it – meaning it both costs less than you might think, and ends up helping only those who really need it.

The biggest source of resistance to providing economic security to all, be it through universal basic income or other forms of guaranteed income, is the idea that people have to work for money – that “you can’t get money for nothing”. This is why, despite a big push for basic income in the early 2000s, the South African state has always resisted the idea. But work has never been able to provide economic security for all in South Africa. Why keep expecting the poor to receive money through work only, when work is unavailable, or unstable and badly paid?

The fact that many countries are now giving citizens emergency cash could be a step in the right direction. Finally, anyone who needs it can access some form of economic support from the state. But this should not be a temporary measure. It does not address a new problem, but rather a very old one that is suddenly worse. What the country needs is not an emergency basic income, but a permanent income guarantee. In fact the Spanish government plans to maintain the basic income it is implementing beyond the pandemic.

No longer business as usual

The circumstances that necessitate an income guarantee have long existed in South Africa. It is time for the government to acknowledge this. There can be no return to business as usual, because business as usual means poverty, suffering and ongoing economic distress.

The poor and most vulnerable understand that the economic insecurity they face is not a state of exception. It is the default. It will not end after the easing of the lockdown.

This international Workers’ Day, the COVID-19 pandemic provides an opportunity to see things as they are – that work cannot be assumed to shelter everyone from economic distress. It also provides an opportunity to delink basic livelihood from wage labour, and begin to develop policies that deliver an economically secure future for all.The Conversation

Hannah J. Dawson, Post-doctoral fellow at the Society, Work and Politics Institute (SWOP) , University of the Witwatersrand and Elizaveta Fouksman, Leverhulme Early Career Fellow, University of Oxford. This article is republished from The Conversation under a Creative Commons license. Read the original article.