by Malcolm Torry | Aug 6, 2020 | Research
Katrin Oemmelen has written an article, ‘Using poverty reduction policies in the fight against COVID-19’, which is a summary of her dissertation.
The results of a six-year research project in Namibia shows that access to financial tools such as universal
basic income and microcredit, in combination with financial literacy, can have a measurable impact in
Namibia, especially during the COVID-19 crisis and corresponding economic shutdown.
The article can be found here.
And the dissertation (in German) here.
by Malcolm Torry | Aug 3, 2020 | News, Opinion
The World Bank has published a substantial report titled Exploring Universal Basic Income: A guide to navigating concepts, evidence, and practices
Universal basic income (UBI) is emerging as one of the most hotly debated issues in development and social protection policy. But what are the features of UBI? What is it meant to achieve? How do we know, and what don’t we know, about its performance? What does it take to implement it in practice? Drawing from global evidence, literature, and survey data, this volume provides a framework to elucidate issues and trade-offs in UBI with a view to help inform choices around its appropriateness and feasibility in different contexts. Specifically, the book examines how UBI differs from or complements other social assistance programs in terms of objectives, coverage, incidence, adequacy, incentives, effects on poverty and inequality, financing, political economy, and implementation. It also reviews past and current country experiences, surveys the full range of existing policy proposals, provides original results from micro–tax benefit simulations, and sets out a range of considerations around the analytics and practice of UBI.
The report can be downloaded free here.
Brief comment
The report employs throughout a definition of Universal Basic Income that matches BIEN’s definition of Basic Income. Consistency of definition is a commendable characteristic of the report as a whole.
The only caveat is that chapter 4 assumes that a UBI would replace existing social assistance provision. Under these circumstances it is not surprising that in some countries poverty and inequality would increase if the UBI were to be implemented. The authors do not simulate the option of leaving existing social assistance provision in place and reducing it by the extent of the UBI. In the context of a progressive tax system, such schemes would not increase poverty or inequality.
Apart from that, this is a most useful report.
by Gery Petrova | Aug 3, 2020 | News, Opinion
The EU Commission has said from the 25th September 2020 signatures can be collected from EU residents in connection with a new European Citizens Initiative. If the European UBI family succeeds in gathering 1 000 000 signatures, divided among a minimum of seven countries, then ECI delegates will be able to present a proposal to the European Commission which, if approved, would hopefully convince EU governments to start paying Basic Incomes to all of their citizens.
Bulgaria suffers from a number of problems, and in particular population loss and economically active citizens leave the country for better opportunities elsewhere. Angel Petrov writes:
The population decline carries long-term economic costs. Over time, a shrinking workforce becomes unattractive to investors and unable to subsidise the pension and healthcare needs of an ageing population.
Poverty and inequality are significant problems in Bulgaria. Bulgarian people currently receive the lowest income in the European Union while the cost of living is increasing. This is paradoxically occurring during 25 years of steady rise in productivity and mostly rising GDP. The Gini coefficient (2019) is 40.8 and rising.
The Corona crisis measures
All government ‘aid’ described below is highly bureaucratised and full of conditions, and in addition the funds are often paid late due to the complicated and sluggish administrative processes citizens are subjected to. The aid consists of:
- Cash payments of €192 only for families with 14 year old children for the duration of the state of emergency (2 or 3 months)
- over 2 months the unemployment fund will pay 60% of the income of the employees from sectors most heavily influenced by the COVID-19 crisis for up to three months. In addition to employers in sectors where operations have been suspended as a result of the social distancing measures (tourism, sports, culture, etc.), any other employer that can prove a 20% y/y drop in revenue in March is also eligible for the 60% salary subsidy.
- The measure has been extended until 30th of September 2020.
This is the main stimulus. However, the working population has doubts that the administrative process will be efficient enough (it is expected that most companies will receive the aid in October and November 2020). Furthermore, many small and medium businesses don’t have the means to pay 40% of the salaries. Some critics see this policy as supporting big companies which will absorb the unemployment caused by the lack of help for small and medium companies.
- To date (1st August 2020) 129 million leva (64,5 million EUR) have been distributed to 8400 employers, that is 13% of the 1 billion leva (511 million EUR) allocated by the government. Close to 35% from these people have taken aid only for one month.
- On the 10th of April the Bulgarian Central Bank enacted a moratorium on debt repayments. Overall the number of people who have debts in Bulgaria is almost 3 million. By the 10th of May, 102 000 have applied for temporary cancellation on payments (usually 6 months) towards their loans, and 80 300 have been approved. Changes in these numbers are expected.
- The processes are not transparent, efficient and timely
- The measures are conditional and selective and not universal
- Most of the governments support is expressed in loans rather than direct payments
In conclusion the measures so far have the potential to create another wave of workforce immigration towards Western countries, weakening further the economic future of Bulgaria because:
The case for a UBI emergency pilot in Bulgaria
The unnecessary agony of the Bulgarian nature and people can be prevented, and UBI is a key step that can be collectively taken to compensate over three generations who have given their talents, energy and time towards creating shared wealth spreading beyond the country borders. It’s time for common dividends to be distributed to their rightful owners.
Bulgarian UBI advocates are working hard to unite the people around the idea that once social and economic stability is achieved through unconditional payments of around 1000lv (500 EUR) Bulgarians will have the time and capacity to build a new system that meets their needs and corresponds to a consensus based on democratic values. Due to the inflexibility of the national currency (it is tied to the euro), the dominant proposal on how to implement Basic Income in Bulgaria at the moment is by restructuring the tax system and national budget in a way that will pay the UBI bill with the collection of Value Added Taxes and Excise Taxes paid by the sellers. The idea is for every Bulgarian citizen with an active address registration to own a bank card issued by the Bulgarian Central Bank which will serve people as a payment method to be used to receive a Basic Income that would meet basic needs like rent, utility bills, food, clothes etc.
A UBI emergency pilot hosted in Bulgaria would not a utopia, and the EU could rescue its reputation by supporting it. It is an opportunity to trial universal basic income on a national level using the Bulgarian state financial infrastructure to distribute funds to the people.
The EU Commission would also have a vested interest in embracing the project, as the positive results would increase cohesion and trust, and would give hope to other states that the European experiment is not another way to practice concentration of power.
It’s time for evolution not only for Bulgaria but also for the EU. UBI is a win-win solution and will literally bring Bulgaria back to life. People outside long to return to their roots and work for the wellbeing of their parents and the next generations. The EU owes this to the people of Bulgaria and Bulgarians owe it to themselves, their ancestors, the children, and the European natural environment that happens to be surrounded by Bulgarian borders. We have too much to gain and nothing to lose.
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RESOURCES:
More details on COVID related government aid.
Interview (Georgi Nedelchev, in Bulgarian)
UBI Project Paper (in Bulgarian)
Videos:
Discussion on Universal Basic Income (in Bulgarian)
Is UBI possible? Discussion (in Bulgarian)
UBI and Poverty (in Bulgarian)
by Malcolm Torry | Jul 29, 2020 | Opinion
The Canadian Sayout newsletter has printed an article about Basic Income:
… At present government is paying out vast sums of money. In effect, we have a new and large-scale experiment by government in directly providing people with incomes. This gives us some indication
of how a guaranteed income plan could work. Such a plan would be universal. And, as is now being demonstrated, it actually can be done.
A guaranteed, universal, and livable income programme would be transformative for our society. It would directly address income inequality. It would diminish and possibly eliminate poverty once and for all. …
The author, Robyn Peterson, has clarified his use of terms in the article:
a proper BI should be unconditional with the same amount being paid to every citizen or legal resident. This would avoid the somewhat cumbersome issue of establishing who should benefit and by how much, with a progressive income tax system evening things out.
by Courtney Hallink | Jul 28, 2020 | News
There is a translation of this article into French
On 21 April 2020, President Ramaphosa announced a 500 Billion Rand relief package in response to the COVID-19 pandemic. The package included top-ups for existing cash transfer recipients and the introduction of an emergency ‘coronavirus grant’. The emergency grant is available to unemployed individuals who are not eligible for the contributory Unemployment Insurance Fund and informal workers who are unable to work during the lockdown.
The announcement of the relief package followed the submission of an open letter to President Ramaphosa by a group of 75 economists and academics calling for the adoption of a Universal Basic Income (UBI). South Africa already had an impressive system of cash transfers in place prior to the pandemic and therefore has the infrastructure required in order to get people cash. Over 30 per cent of the population and approximately 44 per cent of households receive a government-funded cash transfer each month. Despite the impressive reach of South Africa’s social grant system, it has historically excluded economically active adults. Under the emergency grant, working-age adults receive R350 a month for a total of 6 months, beginning in May 2020.
On 13 July, the Minister of Social Development Lindiwe Zulu announced that the government is intending to implement a basic income grant (BIG) from October 2020, the last month the coronavirus grant is available. A discussion document by the African National Congress (ANC) outlined that the government would adopt a graduated approach to implement the proposed universal grant. One of the first steps would be to provide the grant to the economically active and unemployed between the ages of 19 and 59, the same group that is now receiving the emergency coronavirus grant. This includes approximately 13 million individuals.
The final step in the graduated approach would be a universal BIG that would be provided to all South African residents between the ages of 19 and 59, approximately 33 million people. The ‘universal’ BIG would add on to the country’s existing grant system rather than replacing the social grants already in place (including the CSG for individuals under the age of 19 and the Old Age Pension for individuals over the age of 59). It would effectively create a universal income for working-age adults while keeping a targeted minimum income guarantee for individuals 18 and under and 60 and over. The proposed BIG therefore does not meet the requirements of a universal basic income as defined by BIEN. Nevertheless, it is a notable step towards increasing income security for working-age adults in South Africa.
The announcement for a BIG has come after several failed attempts to extend the country’s social grant system to working-age adults over the last two decades. The first was a proposal for a BIG made by a government-appointed social protection committee in the early 2000s. The second was the push for a Job Seekers’ Grant by the ANC in 2012, which would have provided cash transfers to the working-age population in order to help people look for work. This too made little headway and the proposal was eventually scrapped.
The BIG discussion document drafted by the ANC outlines that the BIG is a response to the economic fallout caused by the COVID-19 pandemic. Yet Isobel Frye at the Studies in Poverty and Inequality Institute shared that the BIG has been under discussion for approximately 10 months, far before the onset of the pandemic. At this point it is unclear whether the BIG will become a permanent feature of South Africa’s social grant system or if it will act as a temporary buffer while the country’s economy catches up after the setback from the COVID-19 pandemic.
