June 2020 Household Affordability Index PMBEJD

PMBEJD: Research Report 23 June 2020 & June 2020 Household Affordability Index

The prices of foods on supermarket shelves whilst still increasing seem to be stabilising albeit off a higher base.  The PMBEJD Household Food Basket has increased by 8,2% (R265) between March 2020 and June 2020, and now costs R3 486. 

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 to being able to put food on the table.  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.

Currently, on our data, workers spend about 50,9% of the National Minimum Wage on transport and electricity expenses alone.  The money remaining is not enough for families to secure proper nutritious food or to pay for other critical expenses.  If the proposed taxi fare hikes of between R4 to R5 on local routes (nationally), and electricity tariffs of 6,9% (in Pietermaritzburg) are implemented, then workers will have to spend 62% of the wage just on transport and electricity.  Even more food will have to be removed off the plate to pay for transport and electricity costs. 

We argue that now, probably more than ever, millions of workers, many of whom are hanging onto 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.  Transport is a non-negotiable expense.  It eats a huge portion of the wage.  We have to find a way to reduce the cost of transport whilst freeing up money for workers to eat properly but also to have money to spend, to demand goods and services in the economy, and now very importantly, where it is increasingly obvious that formal jobs are not going to come; also to invest in a livelihood and build up some level of savings buffer in times of crises.

The state has come out strongly against Gender Based Violence but it does not recognise that part of protecting women also lies in women having electricity so that lights are on at night, and transport so that women do not have to walk home in the dark at night.  Not being able to feed your children is also a form of everyday violence which far too many women have to face every day, but it also makes women vulnerable and increases tension in homes.  

At the time of writing it is not clear if the relief package offered to the taxi industry will result in a lowering of taxi fare hikes.  Unless an urgent solution is found between the taxi industry and government, we must expect deeper levels of hunger, unemployment, poverty, and social unrest.  The principle should be that government and all other actors do not do anything to deepen the household affordability crisis.

Research Report

June 2020 Household Affordability Index

For information and media enquiries, contact: Mervyn Abrahams on 079 398 9384 and mervyn@pmbejd.org.za; or Julie Smith on 072 324 5043 and julie@pmbejd.org.za.

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Pietermaritzburg Economic Justice & Dignity Group