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Saturday, September 10, 2016
SOUTH AFRICA - (UBI) TIME TO THINK BIG AGAIN
Time to think BIG again?
Leon Schreiber says new research has highlighted the benefits of a basic income grant
Social Assistance: A BIG Hole in the Safety Net
Social security is a highly contested policy arena in all democracies. Proposed reforms are often overtly ideological, leading to gridlock because of entrenched partisan positions. In the public realm, sober debates about these vitally important issues are rare, but it is crucial to have them if we are ever to realise the potential of effective social assistance policy in alleviating poverty and inequality.
There are a whole host of powerful policy tools available which can go a long way in addressing the challenges we face - if these programmes are designed and implemented effectively. Indeed, it would not be an exaggeration to suggest that social security is of the utmost importance in combating poverty and inequality.
Developing effective solutions to the challenges of social security in South Africa needs to be preceded by accurately assessing the current state of affairs. However, this is precisely where the high levels of ideological entrenchment inherent to this process complicate matters. Interpreting the situation through differing ideological perspectives means that vastly different conclusions will be reached about the type of reforms that are needed - and I am sure that there will be vehement objections that the following analysis is too ‘left wing'. But I have previously written about potential reforms which would probably be too ‘neoliberal' for others.
I would like to suggest that instead of attempting to classify discussions about social policy into neat ideological brackets, we should simply look to the Constitution to guide us. While it is impossible (and probably undesirable) to suggest that ideology can or should be removed from the debate so that completely ‘objective' problems and solutions can be identified, this must not prevent attempts at discussions which avoid dogmatic rhetoric. One such attempt is undertaken here.
Social protection policies are traditionally divided into three groups: labour protection, social insurance and social assistance. Labour protection entails the enforcement of minimum standards to protect people within the workplace - although this is largely applicable to the formal economy and presents significant challenges in the case of the informal economy. Contributory pensions, health insurance and unemployment insurance meanwhile are all classified as social insurance schemes, whereby individuals pool resources through the regular payment of contributions to the state or a private provider in order to protect themselves against a shock or permanent change to their livelihoods. It is clear that social insurance is more appropriate for the better-off sections of the population, as its contributory nature presupposes the availability of a regular income, while its aims are principally to prevent individuals from falling into poverty.
Because of this limitation, social assistance programmes become vital in cases of widespread poverty where many people are not formally employed. Social assistance comprises non-contributory transfers to ‘those deemed eligible by society on the basis of their vulnerability or poverty' (DFID, 2005: 6). While all three are important elements in the broader system of social security, the focus here will be on the final category: social assistance policy.
Due to widespread unemployment and impoverishment, the special relevance of social assistance in South Africa is clear. The country has a long history of non-contributory social assistance programmes. These were initially developed in the pursuit of creating a welfare state exclusively for whites and included elements like a Disability Grant (DG) and a generous Old Age Pension (OAP) to support impoverished elderly persons.
Social assistance programmes aimed at child rearing were also created, including the State Maintenance Grant (SMG), Foster Child Grant (FCG) and the Care Dependency Grant (CDG). However, state support was uneven and racially skewed. While racial equity was achieved fairly early-on with regards to the OAP, severe discrimination and maladministration persisted especially with regards to the SMG into the 1990s.
Following the transition to democracy, social assistance came to enjoy a privileged status in the Constitution's Bill of Rights, as Section 27 (1) (c) states that ‘everyone has the right to have access to...social security, including, if they are unable to support themselves and their dependents, appropriate social assistance'.
Section 27 (2) elaborates by requiring that ‘the State must take reasonable legislative and other measures, within its available resources, to achieve the progressive realisation of [this] right'. This resulted in significant reforms being undertaken since 1996, although some important features of the historical approach were maintained. This continuation in the patterns of social assistance provision played an important role in creating the crisis we face today.
This is due to the fact that - while important reforms were enacted - the underlying assumptions of the South African social assistance system were not fundamentally transformed. The initial design of the system was influenced by British welfare models and aimed to assist white people in South Africa. As is the case contemporarily, impoverishment and unemployment were certainly much lower amongst white South Africans at that time than it was amongst other racial groups, and this meant that the social assistance policy had to respond to a fairly familiar set of challenges that partially legitimised the use of European welfare approaches: providing support to the elderly and to those on the ‘margins' in the context of an industrialising society.
Problems of impoverishment, unemployment and a whole host of other phenomena - including ‘non-traditional' family structures - were deemed ‘limited' and ‘marginal'. But social problems, poverty and unemployment are certainly (and never were) ‘marginal' challenges in broader South African society. Single (mostly female) parents, child-headed households, joblessness, and poverty - these facts of life are certainly closer to the norm in modern South Africa than notions about full employment and limited poverty. So the question is a simple one: do we have a social assistance system that responds to these societal facts? The answer is probably no.
This is not to deny the significance of the reforms already undertaken. A great deal has been achieved in equalising access to social assistance across all racial groups, and policy changes such as the one that brought about the CSG and abolished the SMG have gone a long way in responding to the realities of raising children in South Africa. Grants, ranging from the pensions to those supporting children, have made a significant contribution in the fight against poverty.
But the assumptions underlying them have not changed significantly. This is because the system continues to pretend that we live in a society where unemployment and poverty are abnormal. It continues to operate under the paradigm of the previous approach by supporting only those deemed ‘worthy' - as if poverty is not really widespread. It basically says: ‘the only people who need help are the elderly, mothers, children and the disabled. The rest of society can support themselves and therefore do not require assistance'. This patently ignores the South African reality, where so many people are not even able to find work.
The result is that we have a system which basically consists of a gaping hole with a limited safety net inside; catching some people but allowing very many others to simply tumble into the abyss. Aside from certain short term programmes, social assistance is basically non-existent for impoverished, able-bodied citizens of working age (between 18 and 60) who are unable to find work. This is simply because - despite all the evidence to the contrary - the assumption still persists that full employment is the norm and that unemployment and poverty are marginal. This delusion is a serious indictment of our societal attitude towards reality. Despite the evidence slapping us in the face every single day, we are still unable to be honest about the challenges we face - so how can we ever begin to remedy them?
There have been attempts at altering these assumptions and introducing innovative programmes that would enable the social assistance system to reflect reality. The most significant were the proposals that emerged from the Taylor Committee on Comprehensive Social Security for South Africa to implement a Basic Income Grant (BIG). This would basically entail something like paying a grant of R100 per month to every single South African citizen and then recouping it from wealthier recipients through the tax system. Unfortunately, the suggestion of introducing a BIG became precisely one of those ideological ‘discussion deal breakers'.
While acknowledging the importance of fiscal responsibility, it was erroneously deemed in some quarters to be a dangerously unaffordable suggestion that would sap people of the desire to work. But that response just again proves our society's delusional misconception that if all the unemployed people just wanted to work, they would find a job and be financially secure. The BIG has since faded from public discourse and, with it, the only serious attempt at fundamental transformation.
But there is an opportunity to revisit the debate in the face of new evidence. One of the indictments of the suggestion was that no other country implements a BIG on a large scale. Alaska in the United States is the most significant example of something akin to it, as citizens there all receive a share of the State's oil revenue. But there was very little in the way of scientific proof that a BIG specifically would be effective. That has now changed, due to a pilot project run by the Basic Income Grant Coalition in Namibia.
This group consisted of researchers, clergy, social policy experts and other academics. Through funding received via donations, they paid a monthly grant of N$100 (R100) per month for two years to every resident of Otjivero, a very impoverished village 100km from Windhoek. They deliberately followed a scientific approach to legitimise their findings. I urge you to read the full assessment report, but some of the most important results included that:
Household poverty had dropped significantly. Using the food poverty line, 76 percent of residents fell below this line in November 2007. This was reduced to 37 percent within one year of the BIG. Amongst households that were not affected by in-migration, the rate dropped to 16 percent.
The BIG resulted in a huge reduction in child malnutrition. Using a WHO measurement technique, the data shows that children's weight-for-age has improved significantly in just six months from 42 percent of underweight children in November 2007 to 17 percent in June 2008 and 10 percent in November 2008.
The BIG has contributed to a significant reduction in crime. Overall crime rates - as reported to the local police station - fell by 42 percent while stock theft fell by 43 percent and other theft by nearly 20 percent.
The introduction of the BIG has led to an increase in economic activity. The rate of those engaged in income-generating activities (above the age of 15) increased from 44 percent to 55 percent. The BIG thus enabled recipients to increase their work both for pay, profit or family gain as well as self-employment
The BIG contributed to the reduction of household debt with the average debt falling from N$1 215 to N$772 between November 2007 and November 2008. Savings increased during that period, which was reflected in the increased ownership of large livestock, small livestock and poultry.
Statistics like a reduction in food poverty from over 70 percent to 16 percent really speak for themselves. This innovative study proves what powerful tools we potentially have at our disposal. But despite its potential, a BIG is patently not a panacea for all the problems we face. It can be but one element - all be it a very significant one - in a much broader change that needs to happen.
Suggesting a possible fix to the social assistance system does not deny that the deep crisis in education should urgently be addressed, or that laws and regulations hampering the creation of small businesses are less important. Of course it would be preferable to have no person relying on social assistance in order to survive. Of course full employment would be indescribably wonderful. But those possibilities are not on the immediate horizon and we need to recognise that fact.
It is also worth restating that financial concerns are real, but this should not prevent the introduction of effective policies that can fundamentally transform our social assistance system. The bigger obstacle is probably the ideological one, but this is actually not an ideological issue - it is a Constitutional imperative. By failing to address the hole in the safety net, we are technically not giving life to the fundamental Constitutional requirement that social assistance should be given to all who need it.
That should resonate, as every day we hear claims about how every single South African loves the Constitution. One can only hope that this love is not conditional upon ideology and whether falling helplessly in love with that document suits us in a particular case. It should apply across the spectrum and we should not be too cowardly (or delusional) to face a challenge which so fundamentally impacts the lives of an overwhelming number of our fellow citizens.
Leon Schreiber is a South African PhD student in Political Science at the Freie Universität Berlin in Germany. The views expressed are his own. This article first appeared on his blog at http://theschreiberei.wordpress.com/. He can be followed on Twitter here.