Show us the money: SA wants bold action from Cyril, and it wants it now
There is still no clarity on whether he’ll up spending amid claims the current package is ‘insufficient’
Pressure is mounting on President Cyril Ramaphosa and his cabinet to announce a stimulus plan that will cushion the country from the economic and social impact of the Covid-19 lockdown.
Ramaphosa indicated in his weekly newsletter on Monday that social grant recipients stand to get an increase on some grants to mitigate hunger.
“We will scale up welfare provision during this period to help households living below the poverty line,” he said as he confirmed that cabinet was finalising a set of measures to respond to the impact of the lockdown on the livelihoods of ordinary people.
The president acknowledged that the lockdown in response to the coronavirus has gravely exacerbated a long-standing problem as SA has been confronted over the past three weeks with distressing images of desperate people clamouring for food parcels at distribution centres and of protests against food shortages.
This is one of the measures the government is expected to announce following Monday’s cabinet meeting to discuss the socio-economic recovery plan for the country.
It is the second such cabinet meeting in less than a week. Last Wednesday’s meeting did not come up with an agreement. A statement merely said more consultation was needed.
It remains to be seen how the government, faced with a recession and a forecast negative 6% economic growth, will respond to the calls to massively ramp up its spending.
The economy was in a recession with 40% unemployment levels before Covid-19 and the shutdown. It requires an unprecedented response from government and business.Matthew Parks, Cosatu
In a policy document on Monday, the Institute for Economic Justice (IEJ) called on the government to launch an emergency rescue package of at least R310bn, saying the current rescue package of R41bn was “clearly insufficient”.
The economic think tank said that while governments worldwide had taken extraordinary measures, the response by the SA government had been relatively limited. The R310bn it proposes would “partially offset the initial shock” and another R100bn would be needed to facilitate tax and payment deferrals.
The institute supports the calls to increase social grants and goes further by calling an increase to all social grants by R500 for three months with an emergency mid-month R500 paid in April to all (R36.7bn). It proposes an extension of the child support grant to an estimated 670,000 pregnant women (R1.9bn) and an automatic renewal of disability grants. Among some of its proposals is the payment in May of a universal basic income grant of R4,500 to every adult without a means test, saying if 85% of adults claimed the money this would cost R150bn.
It also proposes that R4.5bn be spent on 2 million food parcels a month for three months, and wants R20bn to be set aside for personal protective equipment, tracing of contacts of Covid-19-positive people, and testing and quarantine facilities, and suggests that consideration must be given in the short term to “nationalising” beds at private hospitals at cost.
Like trade union federation Cosatu, the IEJ has called on the Unemployment Insurance Fund (UIF) to ensure it is able to pay out an additional R18.4bn in claims, since needs are likely to outstrip the R30bn available through the temporary employee/employer relief scheme.
For Cosatu, key immediate expectations include further efforts to reinforce the capacity of the UIF to disperse its Covid-19 funds to workers who have been retrenched or put on unpaid leave. Doubling social grant payments or at least topping them up as an urgent poverty relief intervention, helping informal workers and long-term unemployed people with food parcels, and massively increased support for badly affected sectors of the economy such as safe transport, personal protective equipment for workers, health and safety measures for workplaces, and testing at workplaces are some of what it calls key interventions.
Cosatu believes the private sector, particularly banks, should come to the party and play a role because the government does not have the capacity to do it alone. It wants “a massive” stimulus plan that will not only cushion the economy and workers from the effects of Covid-19 but can break the recession and the already dangerously high levels of unemployment, poverty and inequality.
Cosatu’s parliamentary coordinator, Matthew Parks, told Times Select that while nobody knows the exact damage to the economy or how many workers will lose their jobs and the impact on the fiscus, all can agree that it will be huge.
“The economy was in a recession with 40% unemployment levels before Covid-19 and the shutdown. It requires an unprecedented response from government and business.
“No business-as-usual or tepid response will pull us away from the precipice. It requires bold, decisive and revolutionary actions,” said Parks.
At last Wednesday’s special cabinet meeting, public enterprises minister Pravin Gordhan was also instructed to prepare an updated report for discussion on the embattled South African Airways.
This came as reports emerged that SAA was considering terminating the employment of its entire workforce by April 30 because the government rejected a request for new funding.