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‘Jobs versus Grants’: Are employment and basic income a policy trade-off?

‘Jobs versus Grants’: Are employment and basic income a policy trade-off?

This IEJ Policy Brief assesses the validity of the narrative presenting social protection and job growth as incompatible (the ‘jobs versus grants’ narrative) while trying to understand why it has enjoyed lasting support in some quarters. It evaluates the research on the impact of social grants on labour market participation and productive activity amongst recipients in South Africa and elsewhere.

The  review of international and local evidence finds the following:

  • Income support increases people’s agency and motivation to pursue work that is meaningful to them.
  • Cash transfers have income multiplier effects, resulting in increased labour supply, increased rates of self-employment, and spillover effects to local economies. 
  • The cost of searching for a job is a  barrier to labour market participation in South Africa. Grants are used to facilitate job search activities.
  • Grants in general are not spent ‘wastefully’—that is, on goods such as alcohol and tobacco. 
  • Women are disadvantaged in the labour market and perform the majority of unpaid domestic and care labour. A UBIG can decrease women’s financial dependence on men and vulnerability to abuse.
  • Beliefs around dependency culture are based on outdated views holding that poverty is the result of personal irresponsible choices—ideas which are not supported by evidence.
  • Unemployment and poverty present an enormous human and economic cost which is unaffordable and unjust. A universal basic income guarantee can eliminate or reduce poverty in South Africa while supporting job creation and inclusive economic growth.