Interview on UBIG – Umsebenzi and The African Communist

This interview undertaken with IEJ Senior Policy Specialist, Neil Coleman, will be forthcoming in the next edition of Umsebenzi and The African Communist.

UMSEBENZI: Comrade Neil Coleman, let us begin by asking the simple question, what is a universal  basic income grant?

Neil Coleman: Thank you for focusing on this issue. A UBIG, in the South African context, is a regular basic income transfer indexed to an objective measure of need e.g. a poverty line, that goes to all adults (18-59)  regardless of employment status, or income level, as a social right that no government can take  away. It takes forward Section 27 of our Constitution which guarantees the right to social security for  all, including social assistance if they cannot provide for themselves and their dependents. It does  away with poverty targeting and means testing which discriminates against the poor, and ensures  that everyone has a floor of basic income, regardless of their circumstances, whether precariously  employed, informally employed, unemployed, or caregivers. It is a simple system to administer,  minimises corruption, and ensures cross-subsidisation of the grant via the tax system. But on its own  the UBIG is not a silver bullet to address the suffering of the poor, working class majority in this  country. We must continue to fight for the provision of good quality and equal public services,  decent jobs that pay living wages and policies that reduce the immense inequality we face.

UMSEBENZI: It seems that there is a global consensus around which UBIG could be developed – at least among the progressive and left forces, but can you explain WHY do we need UBIG in South Africa?

Neil Coleman: Actually the idea of a UBIG is quite controversial in certain progressive circles internationally, for specific reasons that I don’t think strictly apply in the South African case. In part because of the fear that the balance of forces in certain societies, such as India, mean that basic income could only be introduced at the expense of public services, particularly in the context of austerity; in part because of the embrace by some conservative forces of the idea of basic income; and perhaps some feel it would compromise the focus on full employment. Some of these concerns need to be taken seriously, but we also need to look at the specific conditions in South Africa that make this demand so relevant:

  • Firstly the extent of immiseration and poverty amongst the working class, arising both from the current economic crises as well as deep structural factors require an immediate and significant intervention. These factors mitigating against the African working class establishing sustainable livelihoods include: financialisation and deindustrialisation of the economy; landlessness and the lack of a vibrant peasant economy; the small size of our informal economy; and the historical marginalisation of working class rural and urban communities from the economic centres, as a result of apartheid planning. 
  • Secondly the deep crisis of hunger and destitution currently haunting the country, require rapid high impact interventions to transfer income, which the UBIG is able to do. 
  • Thirdly the crisis of state capacity to roll out more complex economic interventions in the short to medium term, and the challenges of corruption, can to a significant degree be short-circuited by a basic income rollout. We have seen this with the SRD grant which, despite its problems, has been rapidly rolled out, with relatively minor problems of corruption, when compared to other programmes. 
  • Fourthly, the stimulus impact of the injection of income into poor and working class communities provides a platform for economic renewal and development, a reality that the SRD grant has demonstrated (despite being so tiny). This is also backed up by international evidence on the impact of basic income trials, which has been comprehensively documented by the IEJ in a recent paper.

UMSEBENZI: Please expand on the question of social cohesion and social solidarity aspects of UBIG, especially for working class communities.

Neil Coleman: While some academic commentators, and conservative media, see a Chinese wall between the employed and the unemployed, with the former as some sort of ‘privileged aristocracy’, this reality simply doesn’t exist in working class communities. Livelihoods are shared in families, extended families and communities, and span a spectrum of activities from part-time ‘hustling’ or survivalist activities, self-employment, informal employment, part-time or casual work, contract and full time work. Across this continuum of livelihoods is the care work which holds communities together, often performed by women from different generations. 

So the notion of one breadwinner or ‘head of household’ providing income in the case of a household lucky enough to have a formally employed earner vs. an unemployed household, is too simplistic to capture this reality of fluid household income dynamics that often move in and out of poverty, and economic status. Many poor households receive some income from the working poor, some grants, as well as other sources- but these income sources are increasingly precarious in the context of growing unemployment and rising dependency ratios, and the soaring cost of living, and therefore insufficient to enable households to afford basic necessities. 

In this context, the introduction of a dependable regular source of income- the basic income guarantee- to all adult members of a household, and extended family networks, is a game changer for social solidarity, and income support in poor working class communities. Here the critical economic unit is the household, not the individual beneficiary, because of the pooling of income that takes place in poor households. This sharing or pooling of income has been well documented in the case of the SRD grant, and other grants which until now haven’t served their intended purpose of focusing mainly on support for old aged pensioners or children (because of the lack of other income support). 

This does not mean that a ‘household grant’ is preferable to an individual grant. Indeed the opposite is the case: The beneficial economic impact of pooling a UBIG given to each adult household member, is demonstrated by modelling done by ADRS which shows that a Universal BIG even at the much lower level of the (updated) Food Poverty Line of R663 increases disposable income in the poorest 3 quintiles, more than a unemployment BIG at the (updated) Upper Bound Poverty Line of R1417. This is because the greater number of grants are pooled in the household. This shows the importance of universality in reaching all those who need income support. The impact of a UBIG combined with the national minimum wage, and access to affordable public services, could be revolutionary in raising the income and living standards of the poorest 50% of the population.

Equally importantly, the UBIG supports and recognises the caregiving activities of women, and gives them economic independence, given that: women face higher barriers to entering the labour market; carry a higher burden of unpaid domestic and care labour; employed women have poorer working conditions and lower pay; and women workers are more precarious and more likely to lose their work. 

A UBIG should be seen as a fairer way of sharing the surplus wealth produced across society – recognising that we all contribute to producing that wealth over our lifetimes, regardless of current employment status, and that we all have a right to have our basic needs met through the dividends of that wealth. This can have a positive impact on social cohesion because it upholds everyone’s basic rights and dignity. Further, targeting has been shown to have a negative impact on social cohesion because it tends to create intra-community divisions and social stigmas.

UMSEBENZI: Although UBIG has gained international attention in recent years, it is not completely a new issue in South Africa, it came up during the 1990s but can you explain what is the difference then and now, in terms of general understanding, policy development and activism around this issue?

Neil Coleman: We placed the demand for a BIG, as organised Labour, at the 1998 Jobs Summit, but at the time it was a left field, and largely unknown idea. It was then taken up by a coalition of organisations following the report of the Taylor Committee that proposed the introduction of a BIG. But the balance of forces in the ANC at the time was hostile to this idea, in particular from the then Finance Minister (Trevor Manuel), President (Thabo Mbeki), and ANC leadership, with the exception of Cde Zola Skweyiya, then Social Development Minister. 

Initially campaigns for a BIG secured social support, but the refusal of government to engage on the idea, as well as certain organisational dynamics, led to the campaign fizzling out. Nevertheless the campaign had an important impact in broadening the social security net, extending the CSG to 18 year olds (at the time of the Job Summit it only reached children up to 7), and putting the restructuring of social security on the agenda. However, National Treasury blocked DSD attempts to develop a new social security policy, which became stuck in government and Nedlac for many years. 

The game changer was the Covid crisis in 2020. The crisis of hunger, poverty and rampant unemployment was stripped bare, and worsened by the socio-economic implosion that followed the pandemic. The introduction of the SRD and caregivers grant (later to be effectively combined) created a platform for progressive civil society voices to campaign for the introduction of permanent basic income support. It became clear that this huge hole in our social security system (with no regular form of income support for adults) had to be urgently filled, if we were to prevent a social implosion, deeper hunger, and even mass starvation. The extent of this danger of social disintegration became clear with the 2021 July looting, which followed the termination of the SRD grant a couple of months earlier. 

However, the attempt to consolidate, improve, and extend the SRD grant as a basis for a permanent form of basic income, came up against the deeply conservative economic policies of Treasury, despite the fact that it was embraced by important sections of government, and increasingly by the ANC, as civil society organisations, the labour movement, and other progressive forces mobilised around this call. Nevertheless we collectively managed to expose and defeat Treasury’s attempts to 

terminate the grant, in 2021, and again in 2022, with the result that the grant has been extended to 2024 March, an election year. This grant is now irreversible, so some form of basic income has effectively been won for South Africa- a world leader in this respect. The issue now is what form basic income will take- the level, who will get it, will it be comprehensive or targeted etc.

UMSEBENZI: You mentioned earlier that on its own UBIG is not a silver bullet to address the suffering of the poor majority in this country – both the unemployed and under-employed. Can you elaborate more on that and how it can be related to other measures, like the expanded public works programme and other interventions?

Neil Coleman: As I mentioned, a UBIG by consistently injecting resources into poor working class communities, creates increased demand for locally produced goods and a platform for local economic development. But if the impact of a UBIG is to be maximised, a range of complementary interventions are required. 

These include a well resourced high-impact industrial policy that promotes jobs-rich economic diversification, and maximises the impact of the increased demand impacts of the UBIG; an appropriate macroeconomic framework that stimulates development, rather than the austerity framework that pits one area of public expenditure against another- and therefore allows for expansion of affordable, universally available public services, and public employment programmes, combined with a UBIG; a coherent strategy for a just energy transition which sees social protection for communities affected by the energy transition, being combined with a programme to promote employment in the labour intensive renewable energy sector. 

A shift in our current inappropriate economic paradigm, which gives rise to austerity, is therefore essential. The introduction of an adequate UBIG will neither be possible within this paradigm, nor will these other interventions be achievable. But growing support for the demand for a UBIG, in the runup to the ANC Conference, represents a real chink in the armour of this backward economic approach which has dominated government’s economic policies in recent years.

UMSEBENZI: That should be very clear, but at times the discussion tended to be posed as employment versus social grants. Is this a valid way of approaching this discussion?

Neil Coleman: The international evidence on this is very clear: basic income and social grants facilitate rather than hinders employment, and job search. This has been thoroughly documented in an IEJ policy brief on Jobs vs Grants. Extensive evidence shows that cash transfers in developing countries have had the effect of growing local economies, increasing people’s participation in the labour market, and increased rates of self-employment. So this debate should be seen for what it is- an ideological attack on the state taking forward its constitutional responsibility to provide for its citizens- building on social prejudices that justify opposition to support for the poor.

UMSEBENZI: Like the National Health Insurance (NHI) which is on the verge of being passed by Parliament, opponents of UBIG always ask: “Is UBIG affordable?” What is your take on that?

Neil Coleman: We are told by Treasury and conservative think tanks that basic income will be economically damaging and unaffordable. However they don’t seem to have fully applied their minds to the evidence, or are not prepared to consider it. Research shows that a basic income set at a reasonable 

level is both affordable, and would have beneficial social & economic impacts. In short, these accounts miss at least three important aspects:

  • The economic multiplier benefits, and associated rise in demand and revenue, resulting from a large injection of income, particularly into poor communities, is significant; 
  • The net costs of a basic income grant are substantially lower than the gross costs (often used as a reference) once the recouped tax (including via VAT), an income tax clawback, the stimulus impact, and partial uptake are considered; and 
  • There are multiple financing options available. These need to be carefully selected and sequenced, avoiding unintended consequences either on revenue, or on the intended beneficiaries. 

Clearly the grant will be a significant commitment, and the wealthy in society will have to be prepared to make a moderate sacrifice to make it happen. This is a small price to pay given the huge disparities in wealth and income in South Africa. There are a range of progressive financing instruments that have been proposed by the IEJ and others for consideration. A wealth tax is one of these, but there are a number of others.

UMSEBENZI: Finally, it appears that important policy advances have been made within our broader progressive movement to move towards UBIG. Could you identify some of the challenges that lie ahead and what could be done about them?

Neil Coleman: There are two immediate challenges: Firstly to improve the value of the SRD grant, and extend it to millions who have been unfairly excluded by current provisions in the regulations. The level of R350 has no basis, and progressive civil society is of the view that the SRD needs to be increased at minimum to the FPL of R663 (the updated food poverty line). This needs to happen in this year’s budget, and the exclusionary regulations which expire in March 2023 need to be amended. Secondly, pathways toward the introduction of a UBIG, within agreed timeframes, and with agreed modalities, need to be discussed and finalised. Our initial discussions with the President in this regard, in January last year were positive. But certain bureaucrats in the Presidency and Treasury in particular have blocked further discussion, despite an agreement that we would meet by the end of June 2022. 

Research is currently being conducted modelling alternative pathways towards a UBIG, and we hope to present this to the President early this year. Further, while some business bodies have come out against UBIG, we are aware that there are significant business leaders who both recognise the value of basic income for the economy and their own businesses, and the danger of not acting, given conditions of extreme social distress. 

While current developments in the Alliance on this front are encouraging- all three partners have expressed support for the introduction of a Universal Basic Income Guarantee- there is a concern that palace politics, factions, and leadership contestation, will overwhelm critical policy issues such as UBIG; further that even if the ANC adopts the demand for a UBIG, there is concern it may not be implemented by government. However, if I look at the long road we have travelled, and how far we have come on this issue, I am fairly optimistic that we can make history by becoming the first country, certainly in the global South, to adopt this radical measure.

UMSEBENZI: Comrade Neil, thank you so much for sharing your perspectives with our readers on the critically important topic! 

Neil Coleman: Thanks, it is so welcome that the SACP has taken up this issue of a UBIG, and is supporting its introduction. The left as a whole has not advanced this demand to the extent it should have, and there are probably a couple of reasons for this. Firstly, there is a tendency to think that issues of reproduction are not as important as matters of production, which are of course critical to any materialist analysis of capitalism. But the dynamic and changing nature of capitalism, and the impact of its growing crisis particularly on the working class in the global South, as well as the central importance of the care economy thrown up so sharply during the Covid crisis, are forcing a reassessment of this perspective. Secondly, the embracing of the idea of (a limited version of) basic income by some conservative forces internationally, and the attempt to use this to undermine public services, makes some on the left suspicious of this demand. So it is a contested terrain that needs to be shaped by progressive forces. South Africa can be a global leader in this respect. Note: the international and South African evidence referred to in this interview is summarised in a series of seven UBIG factsheets recently published by the IEJ and is available here.