(3 minutes read)
- Business Unity South Africa, country’s biggest business organization has gone against implementation of a basic income grant, which is likely to trigger a heated debate that can generate arguments for and against the scheme
- The powerful organization instead pitched for an unemployment insurance type product
- Urging for labor reforms at the earliest to boost employment, reining in fiscal deficit and targeting the vulnerable sections for giving doles, the organization argues that there was a no rationale for making the scheme universal
Business Unity South Africa, the country’s biggest business organization, has gone against implementation of a basic income grant, which is likely to trigger a heated debate that can generate arguments for and against the scheme. The powerful organization instead pitched for an unemployment insurance type product. Urging for labor reforms at the earliest to boost employment, reining in fiscal deficit and targeting the vulnerable sections for giving doles, the organization argues that there was a no rationale for making the scheme universal.
The Covid-19 pandemic has pushed the South African unemployment to a record high. President Cyril Ramaphosa has said it could be necessary for a universal dole scheme. This concept has found favor with Lindiwe Zulu, social development minister. But Finance Minister Enoch Godongwana has thumbed down the concept mainly from the view of fiscal profligacy. Over 18 million South Africans or more than one-third of the population are benefiting from welfare schemes.
Economists are also divided on this issue. Transfer of money would improve the revenue outcomes for people but at the same time an unaffordable basic income grant will create distortions in the economy. The universal grant would cost about 958 billion rand (US$64 billion), according to Barclays Research. If the number of target group is pruned down, a balance can be attained between welfare measures and its impact on the economy.
