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Basic income support is unavoidable, but making it work requires political courage

- Michael Sachs

As government gears up to announce its programme for the next year, through the State of the Nation address and the Budget, it seems certain that some form of basic income support will be a central part of its agenda. The lockdown-induced shocks have added to the crisis of structural mass unemployment, and of poverty. There also seems to be broad consensus that basic-income support is an essential part of our social compact. But the fiscal risks it poses to a fragile economy have not diminished, and government faces some hard trade-offs to ensure these risks are minimized and that other social spending is not compromised. 


A small cash grant to the poorest workers was introduced as an ad-hoc and temporary response to the collapse of employment induced by the Covid lockdowns. The Covid social relief of distress grant (COVID SRD) operates in terms of national disaster regulations, and its financing depends on periodic extensions announced in the national budget. But the success of the grant has underscored a broad consensus in favour of continuation. The first attempt to withdraw it ended in defeat for the treasury in the wake of the organised unrest of last July. Since then, the President has clearly warmed to the idea. The minimum wage helped him forge the coalition of factions that backed him in 2017. Continuing with basic income support may well be necessary to secure his re[1]election at the 2022 ANC conference, and victory for the ANC in 2024. By then the grant would have been in place for five years, and it does not make sense to think of it as temporary.

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This article was first published in Econ3x3