The Start Of 2022 Has Put South African’s In A Tricky Position

South Africans have faced a difficult 2021 and the start of 2022 hasn’t shown any signs of change. The initial jump in food prices from January last year to January this year is currently up at 9%. While South Africans are already seeing an increase in food prices, the Pietermaritzburg Economic Justice and Dignity Group or PMBEJD, had said that SA is also likely to see an increase in petrol prices due to a rise in crude oil prices, as well as Eskom applying an increase of 20.5% in tariffs. 

Since December last year, South Africans have continued to face intense inflation rates with a 5.9% inflation increase in December alone! However, South Africans seemed to jump with joy after the BankservAfrica had released their latest take-home pay data which showed there were more temporary and part-time workers that were employed over December 2021 as opposed to December 2020. With this South Africans also saw a rise in the average nominal take-home pay, sitting at R15,542 as of December last year versus the R15,243 in January 2020. 

Though South Africans may be happy to hear the average nominal take-home pay has increased over the previous year, real take-home pay which takes inflation into account, saw a decline of 5.2%. This essentially showing that South African workers are actually poorer than they were a year ago!

Considering this, it’s basically like kicking a horse while it’s down, the stated increase in food prices are likely to affect items heading to areas that belong to the country’s poorest. This is adding insult to injury when you take into account that the minimum wage is based on the Consumer Price Index or CPI. The CPI is simply a formula used to measure the average change of prices in a market basket of goods and services over a certain period of time. This means that minimum wage can become unbalanced and essentially the cost of surviving will become greater than the value people are paid! 

In December last year, BankservAfrica had released data that showed the total take-home pay that was paid out, to be a hefty R72.2 billion. As much as this information may make you want to rejoice, the total real take-home pay paid out to employees was still lower than the total amount in 2017 and 2018. Though the real take-home pay paid out to employees may have seen an increase of 6.2% since December 2020, our country is still not adequately recovering from its stagger. 

The PMBEJD shows data on their index that states the average cost of a household food basket is currently at R4,317,56 as of October 2021. This food basket consists of items frequently used by low-income houses in South Africa, of these 44 food items 31 of them had increased in price from January last year to January this year. With some items like tomatoes reaching an increase of 45% and cooking oil increasing by 30%, it’s not hard to agree that South Africans have been put in a tight spot this year.  

If we take a regional look at the change in food prices you will see that Pietermaritzburg food prices increased 9.8%, Johannesburg food prices increased by 9.7%, Durban saw an increase of 9.6% and Cape Town saw an increase of food prices at a surprising 8.8%. While considering that the minimum wage for a temporary worker in South Africa is R3,643.92 as of January this year, and the fact that within the best circumstances, non-negotiable costs such as electricity and transport can take up to 57% percent of that, the average temporary worker would fall under the food poverty line. 

Take a look at the math, 57% of the national minimum wage is R2,077.03, which leaves approximately R1,566.89 when you subtract the 57% from the original minimum wage value. Now taking into account that the average household size in South Africa is 3.3 people per household and R1566.89 divided by 3.3 is R474,81. Finally, looking at the food poverty line of a person per month in South Africa, you will see it sits at R624. Now I’m no scientist but that is certainly below the food poverty line. 

The PMBEJD had stated that the government’s recommendation for the National minimum wage to face an increase of a Consumer Price Index(CPI) by 1% as of March this year, was simply not enough to cover the continually rising costs that South Africans are facing. The PMBEJD had said the proposal for the CPI was even less than last year and that changes in these values which are linked to inflation from previous years and not linked to inflation that is projected in years to come, will increase worker poverty.