Letter: Basic income grant will increase dependence on the state

Momentum is building for a basic income grant (Big) in SA ("Ramaphosa says basic income grant will show government cares”, July 18). Far from seriously addressing the causes of the country's growing unemployment crisis (a unemployment rate of over 42% on the expanded definition), a Big will give bureaucrats and politicians the short-term feeling that they are "doing something", but do little to give millions of South Africans a chance at actual prosperity.

The introduction of a Big will not address any of the government-imposed barriers currently enforced in the areas of business and entrepreneurial activity or job creation. The power of bargaining councils, race-focused labour legislation, the national minimum wage and much else all serve to create an antibusiness, anti-investment, anti-job environment.

Lower-skilled employees are priced out of employment, unable to find work, and in those few instances when they do employers are discouraged from taking them on. Introducing a Big also disincentivises policy reform and quality improvements in the public education sector. Young South Africans enter the world of work severely hobbled by the limitations and weaknesses of state education.

A Big will place more strain on a teetering fiscus — unless VIP protection costs and cabinet salaries are drastically cut, and that is unlikely to happen. Even more important than the fiscal consideration is the moral point: through the Big the government appears to be set on the path of transformation — transforming yet more of society into a condition of dependence on the state.

Real, progressive economic transformation means job and wealth creation, not zero-sum redistributionism. Creating yet more dependence on the state will not offer anyone real dignity. In the absence of pro-economic freedom reforms, too many South Africans will remain mired in grinding poverty.

This letter was first published on BusinessDay on 20 July 2021.