“Covid-19: Household affordability thresholds now threaten to be further breached – taxi fare hikes major risk.”
In its June 2020 report, “Household affordability crisis: National Minimum Wage and electricity tariff hikes”, the organisation Pietermaritzburg Economic Justice and Dignity notes the impact taxi fare hikes will have on poorer consumers.
In addition to steep rises in basic food prices in the past three months, workers earning the minimum wage, or even less, face a crushing double whammy of impacts on their income that will inevitably lead to less cash for the food basket and thus poorer nutrition for individuals and families.
The Pietermaritzburg-based PMBEJD regularly conducts research and publishes info on its “Household Food Basket”.
“The household food index is designed with women living on low incomes to provide a sense of what the food baskets of low-income households cost in Pietermaritzburg and is specifically designed to measure food price inflation as experienced by households living on low incomes,” it says, according to a recent article published by TimesLIVE. Although they’re based in PMB, the data is also useful in drawing a picture of what’s happening in many parts of SA.
The organisation, while noting the pressure consumers are under, said in its report, “The prices of foods on supermarket shelves while still increasing, seem to be stabilising, albeit off a higher base.”
The cost of the PMBEJD Household Food Basket
Over the past three months, covering the period pre-lockdown (March 2) to June 3, 2020, the price of the PMBEJD Household Food Basket increased by R265.23 (8.2%), taking the total cost of the basket in June 2020 to R3 486.23 (from R3 221 in March 2020).
The year-on-year price of the basket increased by R420.94 (13.7%), from R3 065.28 in June 2019 to R3 486.23 in June 2020.
PMBEJD notes that: “The substantial increases in food prices have put enormous pressure on household affordability. The increase in the cost of the household food basket is a major concern, however the imminent taxi fare hikes and annual electricity tariff increases now present a further threat.
“Not all goods and services compete equally in the household purse – expenses like transport and electricity are non-negotiable and must be set aside before any other expense is paid. Money for food arises only after these non-negotiable expenses have been paid. With no increase in income, the imminent taxi fare and electricity hikes in the face of the substantial spikes in the cost of the household food basket will act to deepen the crisis in homes.”
Affordability thresholds for households living on low incomes
According to PMBEJD research, in June 2020 a worker earning at the maximum level of a National Minimum Wage of R20.76 per hour, for an 8-hour day, and allowed to work the full number of working days (21) in June 2020, will take home a wage of R3 487,68. In Pietermaritzburg, transport to work and back (two taxi, return) will cost R1 176 (33.7% of the NMW). Prepaid electricity for her/his family of four, will cost about R598,52 (17.2% of the NMW). Together, transport and electricity take up R1 774.52 or 50.9% of the NMW, leaving R1 713.16 for all other household expenses.
If proposed taxi fare hikes and electricity tariffs are implemented, then workers may have to spend 62% of the wage just on transport and electricity. Even more food will have to be removed off the plate.
“We argue that now, probably more than ever, millions of workers, many of whom are hanging on to jobs and paid at the lowest wages, cannot withstand a massive spike in goods and services, and nor should workers have to continue to carry the cost of an unchanged apartheid geography (which leaves workers far from their places of work) and inadequate transport system. Most of the wage of a low paid worker goes on transport,” writes Pietermaritzburg Economic Justice and Dignity.
“The principle should be that government and all other actors do not do anything to deepen the household affordability crisis.”
The research showed that food prices have spiked across the board in the past few months, some include:
Increases on staples:
Cake flour: 7%
White sugar: 4%
Cooking oil: 13%
White bread: 16%
Brown bread: 14%
Increases on protein and calcium:
Sugar beans: 18%
Comment: “Households are extremely vulnerable to price increases on the non-negotiable expenses because any increase on these goods (eg transport fares and electricity) directly reduce the available money to be spent on food.
“Women tell us that three major strategies are employed to deal with income shortfalls:
• Women cut back on expenditures
• Women sacrifice their own bodies by cutting back on nutritious food to prolong the period of relatively better nutrition for their children
• Women take on debt”
**For information contact: Mervyn Abrahams on 079 398 9384 and firstname.lastname@example.org; and Julie Smith on 072 324 5043 and email@example.com. Read the full report and further data on the Pietermaritzburg Economic Justice and Dignity website