Basic Income Support Debate: Launch of the Expert Panel Report
The International Labour Organisation (ILO) and the United Nations Sustainable Development Goals Fund together with the Department of Social Development (DSD) commissioned a Panel of Experts (Panel) to examine the salience and feasibility of a Basic Income Support for working age individuals between the ages of 18 and 60, in South Africa. The panel comprised of seven experts from various research institutions across South Africa and internationally, namely; Prof Alex van den Heever (Chair), Prof Margaret Chitiga-Mabugu, Prof Stephen Devereux, Prof Murray Leibbrandt, Prof Michael Sachs, Prof Jan van Heerden and Prof Gemma Wright.
The report compiled by the panel reviewed the current socioeconomic position of South Africa and provides a deeper understanding of the plight of income-compromised adults and whether a sustainable system of income support can be implemented to mitigate their circumstances. The report affirms that income poverty in South Africa is so pervasive that more than half of the households live in poverty, with low incomes and poverty extending into the 6th and 7th decile.
Twenty (20) percent of households (nearly 12 million people and 4 million households) fall below the food poverty line (FPL) equivalent to a monthly value of R595. These households and over 90% of the households in 3 decile are below the Lower Bound Poverty Line (LBPL) equivalent to a monthly value of R860. Forty (40) percent of the population (equivalent to a population of 29 million in 8 million households) fall below the upper-bound poverty line (UBPL) equivalent to a monthly value of R1,300. From decile 6 downward, the income earned from employment also declines steeply with social grants making up an increasing proportion of disposable income. Amongst the poorest 10% of the population, income from social grants makes up 95% of disposable income.
The report also finds that the distribution of income from employment is also highly skewed in favour of the 10th decile, with mean monthly per capita income more than double that of decile 9, and nearly four times that of decile 8. The disparity in incomes from employment can be ascribed to very high levels of unemployment (48.9% for the broad definition as at April to June 2021 or approximately 12 million people) and very unequal pay scales for those employed. Approximately 70% to 80% of South Africa’s population therefore lives in precarious and insecure conditions with little prospect of any relief in the near future.
Although the COVID-19 pandemic has exacerbated certain of these conditions, the evidence indicates that these features are endemic and long-term in nature and have not responded to government interventions implemented to date. It is within this context that the panel of experts examined the appropriateness and feasibility of direct income support for adults who presently fall outside the existing systems of income support.
The panel of experts recommends that the existing COVID-SRD grant be institutionalised and form the platform for an expanded system of basic income support or BIS which can then be improved incrementally over time. The panel of experts also regard the elimination of income poverty – as measured using the UBPL - as the goal for the system of social assistance, which should be progressively achieved over time. The report further investigates the financing options and the effects on the economy and makes recommendations to government on these.
Taking these factors into account, the panel of experts are of the view that an entry-level version of the BIS can be safely implemented using a mix of financing approaches, including limited debt financing, tax revenue improvements arising from any demand stimulus and carefully calibrated tax increases where required.
The Department of Social Development welcomes this report and will consider it for further internal discussions and social dialogue with key stakeholders.
Media enquiries may be forwarded to Ms Lumka Oliphant on 083 484 8067 or email Lumkao@dsd.gov.za
