Guest Contributor | Jul 25, 2017 | 0
Policies that can really reduce poverty
In general there are two major types of poverty, absolute poverty and relative poverty.
The first is when people have insufficient income to afford the basic necessities of life, such as food, rent and clothing. Relative poverty is when people have income significantly less than the average income.
Policies to reduce relative poverty should focus on three objectives, to reduce unemployment, to implement progressive tax on income, and to increase benefits to the poor.
The unemployed have no choice but to rely on state benefits. Unemployment can be reduced through both supply side and demand side policies.
The government should spend more on community projects and new training programmes to open new doors for business opportunities.
But they should be careful to make sure that projects are well planned and forecast. Projects must plough back both at community and national level.
Create funding mechanism that are contingent on mentorship and financial education and create new classes of loans for young entrepreneurs.
Increasing progressive taxes, such as the higher rate of income tax from 40% to 50%, will take more income from those on high income levels. This enables cuts in regressive taxes and increased benefits which help increase the income of the poor and allow the poor to keep a larger share of their income.
Increasing benefits to the poor
Means tested benefits involve increasing welfare benefits to those on low incomes. For example, universal tax credit or child benefit, insurance coverage, meals and cafeteria plans, and retirement plan contributions.
Advantages of means tested benefits:
1. They allow money to be targeted to those who need it most. E.g. family tax credit or pension credit; and 2. It is cheaper than universal benefits and reduces the burden on the tax payer.
Haikali Wage Policy
The government could increase the national minimum wage. This is an effective way of increasing the incomes of the low paid, and therefore reducing wage inequality.
I am calling on the Government to call all the sectors on board and strictly introduce the new Haikali Wage policy that states:
1. If a company can pay its top manager N$35,000 upwards, it should not pay its low-level workers less than N$2500. There should be equal percentage elasticity between top managers’ salaries and low level workers.
2. If any company gives car or house allowances to top managers, it should give 40% that will contribute to and be shared among the workers benefits.
A related concept is the Voluntary Living Wage – an attempt to encourage firms to pay higher wages.
Benefits in kind
These are important public services which are provided free or subsidized at the point of use. They mainly involve education and health care. Affordable education enables those from low income families to gain skills and qualifications which can lead to better jobs and higher incomes in the future.
Being poor is not a sin, but remaining trapped in poverty while we have the capability to change our situation is not acceptable. Poverty is not an accident, it is man-made and can be removed by the actions of human beings.
(Edited minimally only to ensure legibility – Ed.)