Income equalisation, a solution for South Africa?

INCOME equalisation is a scheme which allows workers and professionals who are eligible taxpayers to even out fluctuations in income by spreading their gross income from year to year.

In Western Australia a voluntary income equalisation fund targeted at farmers, fishers and foresters helps to balance periods affected by seasonal agricultural work.

In similar categories of work, an equalisation fund makes sense, since the benefits of averaging out yearly income outweigh the short term gains to be made from seasonal contracts.

Part of the problem of agriculture and fisheries workers dependency on farmers and the fishing industry, who in turn only rely on workers and labour part of the year, is the insecurity inherent to the industry.

The money contributed to the equalisation fund is reinvested and earns interest which is then paid out to the recipient in the form of a dividend.

In South Africa, workers affected by seasonal changes could use the fund to guarantee income in the off-season.

In other categories of work, income equalisation could even out differences in salaries, since not all companies pay the same wage for the same amount of labour.

Examples of activities that would qualify for income equalisation include:

  • beekeeping
  • animal husbandry
  • dairy farming
  • grain and seed growing
  • market gardening
  • fruit growing
  • poultry farming
  • share-milking
  • vegetable growing
  • vineyards

Income equalisation should be seen as an efficient means of guaranteeing stability in the labour market, and like unemployment insurance, there are many benefits to be had from collective bargaining in a voluntary labour economy.

SEE: Towards a Social Wage