An expert panel commissioned by the Department of Social Development (DSD) believes that the government can implement a permanent grant for unemployed adults without any major economic trade-offs.
Currently, unemployed individuals can apply for the Social Relief of Distress (SRD) grant. However, the SRD grant is not permanent and the government is set to conclude its implementation in March 2024.
Professor Alex van den Heever believes the SRD grant can be made permanent in a way that is financially and economically sustainable.
Van den Heever was presenting the expert panel's findings in the report titled “The Expert Panel on Basic Income Support: Report into the appropriateness and feasibility of a system of Basic Income Support for South Africa” during a BRICS Research Network Session.
They explained that the report's funding indicates that it is possible to implement this type of grant while simultaneously protecting economic growth. This can be done using a balanced approach and will achieve important redistributive effects.
The report trialed four funding models that could be used to introduce a permanent support grant for unemployed adults and evaluate the social and economic impact of each funding model.
The funding models are
- Financing a permanent SRD grant (R50 billion total budget for 13.1 million beneficiaries) through an increase in Value Added Tax.
- Financing an SRD grant (R50 billion total budget for 13.1 million beneficiaries) through an increase in Personal Income Tax (PIT) of the top three deciles
- Introducing a wage subsidy equivalent to R50 billion, financed entirely through PIT increases on the top three deciles and allocated to the bottom four occupational groups (domestic workers, elementary workers, operators and skilled agricultural workers)
- A hybrid approach combines a wage subsidy at 50% of the cost of the SRD Grant (R25 billion), both financed entirely through PIT.
Several civil society organisations have called for the government to introduce a Basic Income Grant. The groups are also calling for the amount received by recipients to be above the food poverty line.
