South Africa's universal basic income question

Following South Africa's recent general election the country's current ruling party the Afr​​​​​​​ica National Congress the ANC has committed itself to a universal basic income for the country's citizens. This would make South Africa the first country in the world with a policy of paying all people between the ages of 18 and 59 a regular income without the condition of looking for work.​​​​​​​

The current situation in South Africa is that the government pays the Social Relief of Distress grant (SRD) to anyone who has less money entering their bank account each month than the individual food poverty line. This is the minimum income a person needs to be able to buy enough food to survive. The SRD grant pays around $18 per month to adults without income. It is a small payment but it has had some success with 93% of those receiving it spending it on food, and it is estimated to have lifted 2.5 million people out of food poverty.

Economists from the Johannesburg-based Institute for Economic Justice (IEJ), believe that putting money into the hands of the poorest households is going to lift the whole South African economy. Several civil society organisations in South Africa are asking the ANC-led government for a basic income grant in the country. The IEJ believes that the payments boost consumption in South Africa and the payments will reduce poverty. This is vital in a country with an unemployment rate of 32.9%.  A universal basic income could also help to narrow income inequality in South Africa which has a Gini coefficient of 0.67. 

For many governments across the world, the idea of a universal basic income was not taken that seriously until the COVID-19 pandemic. But payments made by many countries because of lockdowns where people could not work changed all that. For example, Spain put into place an anti-poverty payment of €1,015 a month to 850,000 households, while the Coronavirus Aid, Relief and Economic Security Act in the US paid $1,200 to all adults earning less than $99,000 a year. The UK's furlough and the self-employment support scheme distributed £100bn to those out of work and the self-employed. 

South Africa kept paying its Covid grants after the pandemic, although there was a pause in April 2021 but after a summer of civil unrest that followed the ANC government started the payments again.  

South Africa's proposed universal payment system has its critics. Its major problem is the scheme's cost and the drain it has on the public finances. South Africa's national debt is currently 74% of GDP. It also comes with a risk of inflation because money put into the economy does not come with a productive return. Finally, the scheme comes with corruption with some claimants gaming the system to receive payments that they are not eligible for. 

One if the questions posed by some economists is that if artificial intelligent signicantly reduces the number of jobs for people to do in the future then a unversal basic income could become a necessity. 

Some possible questions to discuss with a class

1. Research into how a universal basic income might work. 

2. What might be the benefits to South Africa of a universal basic income?

3. What might be the costs to South Africa of a universal basic income?

4. Discuss how would you would feel about not working and being paid a high universal basic income.