DOZENS OF SOUTH African civil society organisations, trade unions, academic and research bodies –and influential observers like the Organisation for Economic Cooperation and Development – have been calling on the government to phase in a universal basic income by ramping up the Covid-19 social relief of distress grant.
Instead, the Treasury and Presidency reportedly favour an exceedingly narrow, exclusionary and complicated approach. This approach would deprive millions of people of desperately needed income support by adding new layers of restrictive conditions. The proposals hark back to the heydays of neoliberal social policy: the overriding goal seems to be to limit the state’s obligations to the citizenry while focusing on economic growth and job creation as a cure-all.
Policymakers remain in thrall to that dogma, even though it’s refuted by decades of evidence. Our unemployment rate has exceeded 20% since at least the early1990s and it stood at 34% in mid-2022, or almost 45% when, more realistically, counting people who had given up looking for work. Our economy is structured in ways that generate great wealth (that is seized by a small minority), but without the paid labour of close to half the adult population.
The downsides of means testing
The latest proposals downplay the severity of the social crisis and ignore its structural causes. They artificially segment populations who, in reality, live in similar desperation –– offering one group rationed support, while denying it to the other. They do this by tying support to certain conditions (for example, proof that one is looking for work). They require proof (through means testing) that one “needs” income support. The fact that this became a staple of social policy globally over the past 40 years makes it no less unfair, inefficient and ineffective.
Those sorts of schemes require collecting detailed information about the targeted beneficiaries –– for instance, regularly verifying their incomes –– that is often out-of-date, incomplete or plain inaccurate. Or, when tied to job-seeking, they force people into the costly theatrics of proving they’re looking for work, even when the odds of finding employment are vanishingly slim.
Burdensome and prone to error and delay, targeted programmes routinely miss large proportions of intended beneficiaries. This makes them poor at drastically reducing income poverty. Brazil’s flagship Bolsa Familia programme, for example, missed very large percentages of intended beneficiaries (despite the country’s relatively strong administrative capacity) as did Mexico’s Oportunidades programme. None of the 42 targeted social protection schemes examined in a large review had exclusion errors of less than 44%; 12 of them had exclusion errors of over 70%.
Similarly, the emergency cash payments provided in South Africa during the first wave of the Covid-19 pandemic brought vital relief to millions of people. But they were marred by serious inefficiencies and inaccurate and outof-date information. This led to huge delays and gaps in coverage. In the grant’s initial cycle, only 6.4 million applicants were approved, even though the eligible population was estimated at 10-12 million people. Almost half of eligible individuals who were not receiving the social relief of distress grant by mid-2020 were in the poorest third of households.
Means testing is also highly unfair in places with very widespread poverty, like South Africa, since it is insensitive to the tiny changes that can shift people in and out of eligibility. Limiting income support to people earning less than, say, R663 per month (the current “food poverty line”) and denying it to others earning, say, R800 involves a pitiless distinction between people in equally dire circumstances. The schemes also struggle to reliably identify who should receive support at a given point, leading to unmerited interruptions and delays in the receipt of support. This is why Thandika Mkandawire insisted that targeted and means-tested income support does not make sense in places where large proportions of the population are poor. This is especially the case if universal payments can be clawed back through taxation from higher-income earners (which they can).
This is borne out by research evidence. Studies of income distribution data from Ethiopia, Malawi and Zambia, for example, have shown that very small differences in personal and family circumstances separate people in the bottom 50%-60% of per capita consumption. When eligibility is based on tiny changes in circumstance which ordinary people don’t see as real differences, it also feeds a sense of unfairness, resentment and social tension.
Conditionalities miss the point
The Treasury proposal seems especially keen on limiting support by tying it to a job-seeking conditionality. This kind of approach is loaded with authoritarian distrust. At root it assumes that people with little or no money to spare have to be forced to do what’s “good” for them.
Defenders say conditionalities offer leverage to “engineer” certain desirable behaviours (like enrolling and keeping children in school, having them vaccinated or having regular health check-ups). In fact, research shows that it’s very often not the conditionalities that lead to the desired behaviours. It’s the fact that families are more likely to keep their children in school, or travel to a health clinic, when they can afford to do so. In South Africa, with close to half of adults unable to find work, a job-seeking conditionality is fundamentally misplaced.
A universal basic income (UBI) would be much more effective at reaching people with no or very low incomes, and therefore better at reducing severe income poverty. That’s because it avoids the typical inefficiencies and unfairness associated with targeted and/or means-tested transfers, such as incomplete coverage, arbitrary exclusion, complex and errorf illed administration, and corruption. It would spare people the stigma and humiliation of having to constantly “prove” their poverty to state officials. It is also much easier to implement, it radically reduces opportunities for corruption, and it provides regular, dependable support that enables people to plan ahead.
Work can mean many things
Since everyone would get a UBI, it would affirm the principle of universalism and satisfy the criterion of fairness. Some people find it disturbing that a UBI would democratise people’s access to entitlements, since the payment would dispense with distinctions between people who “deserve” support and those who do going. Societies would cease functioning without the (typically unpaid) reproductive and other care work that women and girls perform, for example. Work can mean many things Since everyone would get a UBI, it would affirm the principle of universalism and satisfy the criterion of fairness. Some people find it disturbing that a UBI would democratise people’s access to entitlements, since the payment would dispense with distinctions between people who “deserve” support and those who do not. Waged work features centrally in that moralistic outlook. It revolves around a deep-felt sense that it is chiefly through selling our labour that we “earn” our place in society.
Such sentiments seem absurd in a place like South Africa, where close to half the adult population cannot find regular work, let alone work that pays a living wage. They’re also rooted in very distorted and patriarchal notions of what counts as work. Not having paid work doesn’t mean a person is inactive or unproductive. A great deal of crucial work goes unpaid and is taken for granted: raising families, tending the sick and frail, volunteering, assisting neighbours, studying and acquiring skills, or trying to get an income-earning activity going. Societies would cease functioning without the (typically unpaid) reproductive and other care work that women and girls perform, for example. Work can mean many things.
A UBI would underwrite all forms of work, paid or not, as well as people’s search for jobs, by providing a dependable source of income for the tens of millions of South Africans who currently lack it. And it would face up to the fallacy that having paid work is a sure shield against poverty. Close to 40% of people with paid work in South Africa do not earn enough to regularly afford the basic living expenses of their households, and almost one fifth of workers in the formal sector are living in poverty. The need for a universal basic income seems indisputable and its practical advantages are huge –– for reducing poverty and inequality, improving children’s health and education status, reducing stress and trauma, boosting economic demand, and enabling communities to build greater resilience against the impact of climate change. Instead of proposing regressive, exclusionary and unworkable income support schemes, policymakers should be sitting down with civil society to find the best ways to start financing and implementing the UBI our society deserves.
Hein Marais is the author of In the Balance: The Case for a Universal Basic Income in South Africa and Beyond, published by Witwatersrand University Press. The book is available in bookstores, online and as an open access download.