Jobs versus Grants: Are employment and basic income a policy trade off?

The document contends that social grants do not cause labour market withdrawal but instead increase agency and the ability to search for work. It provides evidence from South Africa and other low-and middle-income countries showing that cash transfers can stimulate local economic growth, increase self-employment, and improve human capital. The text argues that a universal basic income guarantee (UBIG) is necessary to address immediate hunger and gender injustice, as it supports unpaid care work and provides workers with an 'exit option' from exploitative employment.

• Cash transfers do not lead to a 'dependency syndrome' or cause people to stop working or seeking employment; instead, evidence indicates that grant recipients in South Africa remain highly motivated to work for reasons such as personal fulfilment and community contribution.
• Income support can actually facilitate labour market entry by reducing the financial barriers to job searching. In South Africa, the average monthly cost of searching for a job was R938 in 2019, and the SRD grant increased the probability of job searching by 25 percentage points.
• Evidence from various countries shows that cash transfers stimulate local economic growth and self-employment. Examples include a 50% increase in production value in Zambia, an 8% increase in agricultural input expenditure in Lesotho, and a 51 percentage point increase in productive asset ownership in Kenya.
• Cash transfers exhibit an income multiplier effect where local demand and spending grow beyond the value of the grant. This was observed in Zambia, where consumption increased by 25% over the grant value, and in Ghana, where non-beneficiaries also saw income growth.
• Research from UNICEF in Africa and the World Bank contradicts claims that grants are spent on 'temptation goods' like alcohol and tobacco. In South Africa, 93.3% of SRD R350 grant recipients spent the majority of their funds on food.
• A universal basic income provides an 'exit option' that allows workers to refuse exploitative work and improves their bargaining power to lift wages. However, this requires the grant to be set above the poverty line and supported by labour protections like minimum wages to avoid becoming a subsidy for exploitative employers.
• Relying solely on job creation to solve poverty disadvantages women, as it ignores the value of unpaid care work (such as caring for children and the elderly) which is disproportionately performed by women.

APA

Institute for Economic Justice (2022). Jobs versus Grants: Are employment and basic income a policy trade off? https://www.iej.org.za/wp-content/uploads/2022/12/IEJ-UBIG-3-fact-sheet-web.pdf

Chicago

Institute for Economic Justice. Jobs versus Grants: Are employment and basic income a policy trade off? 2022. https://www.iej.org.za/wp-content/uploads/2022/12/IEJ-UBIG-3-fact-sheet-web.pdf.

Wikipedia

{{cite report |author=Institute for Economic Justice |title=Jobs versus Grants: Are employment and basic income a policy trade off? |date=November 2022 |url=https://www.iej.org.za/wp-content/uploads/2022/12/IEJ-UBIG-3-fact-sheet-web.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{instituteforeconomicjustice2022jobs, author = {{Institute for Economic Justice}}, title = {{Jobs versus Grants: Are employment and basic income a policy trade off?}}, institution = {Institute for Economic Justice}, year = {2022}, month = nov, url = {https://www.iej.org.za/wp-content/uploads/2022/12/IEJ-UBIG-3-fact-sheet-web.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }