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SA cost of living remains unaffordable

by Staff reporter
26 Jan 2022 at 04:42hrs | Views
The cost of living in South Africa keeps going up and the basics are likely to continue to be unaffordable for many despite the 4,7 percent increase in the minimum wage, according to analysts at e-commerce company Picodi.

In the research, which looked at whether minimum wage rates can ensure a minimum standard of living in a given country, South Africa's minimum monthly wage rose from R3 555 to R3 722 (net) as of January 1.

Covering 64 countries, the study ranked South Africa 36th among countries that saw an increase in minimum wage. It also found that a worker can live off the minimum wage as the value of basic food products at the beginning of 2022 is R1 340. This means the cost of basic food - which may include items such as bread, rice, milk, meat, cheese, fruit and vegetables - for one adult per month accounts for 36 percent of the net minimum wage.

Picodi notes that the same products were worth 36,7 percent of last year's minimum wage, therefore, this means that the increase in minimum wage has slightly exceeded the increase in prices. In terms of affordability - the ratio of basic products to the minimum wage - South Africa ranked 48th out of the 64 countries as overall product prices potentially absorb 36 percent of net earnings.

"Obviously any increase is something to celebrate, given the economic circumstances. If it's enough to sustain (an individual) that's debatable," says FNB agricultural economist Dawie Maree.

"If you look at (consumer) inflation, it's more than that, the recent (figure) is 5,9 percent. But I think what is more concerning is, for example, transport costs with the rise in fuel prices last year and an increase in electricity costs.

"For the lower end of the economy, I'd say more than 60 percent of the expenditure goes into the food basket … And for a general worker, that's not sustainable to keep up with the living expenses and the increases in those prices. We are actually getting poorer and poorer in terms of our disposable income in South Africa," he adds.

The increase may be welcome, but data from the Pietermaritzburg Economic Justice and Dignity Group (PMBEJD) lays bare the brutal reality of affordability in this country. For instance, the average cost of a household food basket in South Africa in November 2021 was R4 272,44. The PMBEJD reports that the national minimum wage (NMW) for a general worker is R3 643,92. To put things into perspective, transport costs a worker an average of R1 344 (36,9 percent of NMW), and electricity bills an average of R731,50 (20,1 percent of NMW).

Collectively, these expenses take up 57 percent (R2 075,50) of the NMW, leaving R1 568,42 to cover all other household expenses.

The average cost of the PMBEJD basic nutritional food basket for a family of four is R2 921,36. Based on this data, families will have a food shortfall of 46,3 percent (-R1 352,94) if all the remaining money after transport and electricity went to food.

"We have seen that the affordability thresholds of households to secure their very core survivalist needs of transport, electricity, food, domestic and personal hygiene products, educational expenses, school clothes, books, and socks, warm blankets and safe homes have long ago been breached," warns the PMBEJD.

"There comes a time where the gap between what financial resources families can gather, and the costs of goods and services becomes so large that even moderate to substantial decreases in the cost of food - amongst other critical expenses - really makes very little difference in the lives of millions of South African households. .

Source - Moneyweb
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