ANC puts politics ahead of costs in job seeker’s plan

ON MONDAY, the African National Congress’s (ANC’s) national executive committee announced that it would pursue the proposal of a job seeker’s allowance, first suggested at the party’s policy conference in June.

So far there are few details about what this “allowance” will actually be. However, the idea of increasing social grants, particularly for people defined only as “job seekers” could turn out to be replete with pitfalls. At a time when President Jacob Zuma and Finance Minister Pravin Gordhan have warned that increasing social grants is not sustainable, it appears both are feeling the pressure of politics.

The first mention in ANC circles of a job seeker’s allowance seems to have been in policy documents prepared for the conference. Mr Zuma then mentioned it in his opening address. But it was only when delegates were given what appeared to have been the option between the allowance and the youth wage subsidy, which had been opposed by the Congress of South African Trade Unions, that they plumped for the allowance. This is understandable.

Young unemployed men are now the only group in society that cannot qualify for social grants.

Extending the net to include them could make sense from a social inclusion point of view. It would also be promoted as a policy that may inspire hope in those who have none, and would move those who were classified as “discouraged unemployed” into “job seekers”.

This resonates with the basic income grant proposed in the mid2000s, which suggested giving everyone a minimum income from the state, while those who had the means would repay it through their tax. That proposal was very simple, and appeared relatively easy to control. This grant could be more complicated, and face debates about who would benefit, and by how much.

The question from a fiscal point of view, is where would these grants end? ANC secretary-general Gwede Mantashe has said he cannot see such an allowance “without job centres”, and that those who “did not take opportunities on offer would forfeit their payments”.

But once people began to get money, and perhaps to subsist on it, it would be a brave party that would withdraw those payments. From an electoral point of view this proposal could be tempting to ANC strategists. In an election where the Democratic Alliance is campaigning on job creation, and claiming to be a party that can boost small business (partially through laws that would make it easier to hire and fire), the ANC’s counter could be this allowance.

Using this as a campaigning pledge, it is hard to see how the ANC could lose. It would offer cash to those without money, simply for being a “job seeker”. But this is unsustainable. While there would be a stimulus effect as more grant money filtered through, a job seeker’s grant would not generate more jobs.

And while it might at first be only for younger people, the political temptation to expand the number of people on the grant would grow.

Another risk is that it would become politically difficult to remove people from the grant list, and the temptation to widen the net ahead of every election would grow. But the tax base would not.

Mr Mantashe has admitted this proposal has not yet been costed, but says should it become a resolution in Mangaung “there would be costing, etc”. And supporters of the proposal could point to the money budgeted, but unused, for the youth wage subsidy. But the recent history of ANC policy formulation appears to indicate there will be more focus on the politics of the policy than on the financial calculations.