The R350 grant showed how much social help unemployed people between the ages of 18 and 59 needed. This vulnerable population can still receive support, according to the department in charge of social support.
The alarmingly high unemployment rate in South Africa and the significant uptake of the Social Relief of Distress (SRD) grant are indications that people between the ages of 18 and 59 do not have access to adequate social protection.
The SRD grant is acknowledged as an essential support system for working-age adults who are unemployed, however, this intervention is just temporary; the SRD grant’s implementation is scheduled to end in March 2024.
The Expert Panel Report on Basic Income Support was just released by the Department of Social Development (DSD) in an effort to discover a long-term fix.
This paper is the second of two analyses of a fundamental income assistance program for adult unemployed South Africans. The first research, finished in 2024, focused at the social and economic ramifications of broadly implementing Basic Income Support (BIS), while the second analysis considered various finance schemes for the implementation of basic income payments.
The report’s findings show that it is feasible to establish a grant that is comparable to the SRD grant while preserving economic growth, a balanced budget strategy, and significant redistributive impacts. The panel further stated that the SRD arrangement should be made permanent as it posed few economic and financial risks.
How a permanent basic income award would be funded is a topic that has drawn a lot of discussions.
The report examines four potential funding strategies, including raising the value-added tax, raising the top three deciles’ personal income tax, subsidizing low-income workers’ wages, and combining a wage subsidy and personal income tax.
Linton Mchunu of the DSD claims that South Africa is almost ready to implement a basic income award. According to them, the research would help the department decide how to go about implementing a basic income grant.
According to Mchunu, the topic of a basic income grant has changed the focus of the discussion from “should a basic income grant be introduced?” to “how can a basic income grant be implemented?”
They admit that while the introduction of a basic income handout won’t create many jobs, it will significantly reduce poverty and to a considerable extent inequality.
According to Mchunu, work on a policy document for the potential implementation of a basic income grant has already started within the department. The department will use the information contained in the study to reinforce the policy statement.