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17 December 2017 00:44 (South Africa)
Opinionista Zwelinzima Vavi

Minimum wage: Poverty report strengthens Cosatu’s case

  • Zwelinzima Vavi
    vavi-columnist.jpg
    Zwelinzima Vavi
A recent report on poverty by StatisticsSA only highlights how much further the country has to go in order to realise the ideals of the Freedom Charter. The information released, in short, spells disaster for innumerable families – unless the national minimum wage and comprehensive social security come to fruition.

The Congress of South African Trade Unions (Cosatu)’s argument for a national minimum wage, comprehensive social security and a basic income grant has been greatly strengthened by the report released by Statistics SA on 3 February 2015, which exposed the shocking extent, and continued persistence, of extreme levels of poverty.

They have recalculated their poverty lines, using 2011 as the baseline, which shows that more than half the population (53.8%) lives in poverty. This vindicates the view of Cosatu and a number of progressive research organisations, who have long argued that previous official poverty lines (including the one used in the NDP) are not a realistic reflection of the extent of poverty in the country.

Even the ‘Upper Bound Poverty Line’, on which this 53.8% figure is based, is a very conservative measure which is lower than the calculations of university-based institutions on a basket of goods and services needed for a family to survive.

Despite the fact that academics have identified a number of methodological and conceptual problems with the calculation of these poverty lines, we welcome Stats SA’s recalculation of the poverty lines as an important step towards establishment of a realistically set official national minimum living level, or household subsistence level. (1)

Statistics SA defines three levels of poverty, using three different poverty lines:

  1. “Extreme poverty”, defined as only being able to afford a very minimal basket of food, and nothing else;
  2. An “austere poverty line”, defined as a level below which one has to sacrifice some food to obtain some basic non-food items; and
  3. An “upper-bound poverty line”, which measures the income people need for a small basket of absolutely essential items, after meeting their basic food needs.

The recalculation of the figures for 2011 means that the figures for poverty lines in subsequent years are also increased.

The Report defines “extreme poverty” as the lowest possible income to buy just enough food with the minimum recommended energy requirements of 2,100 kilocalories a day needed to stay alive. This is very different from being able to afford a balanced diet and adequate nutrition.

In 2011 this figure was R321 per person per month (pp/pm). Stats SA rebasing of the food poverty line increased it by around 10% to R355 in 2011, and would be about R440 pp/pm in 2014 (2).

Based on this recalculation, the number of South Africans living in extreme poverty (and therefore facing extreme hunger) increased from 20.2% of South Africa's population to 21.7%.

Secondly, the figure for the slightly higher “austere poverty line”, or “lower-bound poverty line” - the level below which one has to sacrifice some food to obtain some basic non-food items, including airtime and transport costs - is revised upwards by 13% from R443 pp/pm to R501 in 2011 prices, increasing to around R615 pp/pm in 2014. The Report calculates that the percentage living in poverty, based on this extremely low poverty line, increased from 32,3% to 37,0% in 2011.

Thirdly, Statistics SA’s “upper-bound poverty level” (UBPL) measures the income people need for essential items after meeting their basic food needs. It has ‘rebased’ or recalculated its figure for 2011 from R620 pp/pm to R779 pp/pm in 2011, which inflates to around R946 pp/pm in 2014 - still a very basic, minimal amount.

Based on this recalculation, the number of people living below the UBPL increased from 45.5% to 53.8%, more than half the population!

We believe that while this UBPL is still extremely low, it comes closer to a more realistic estimate of the levels of poverty in the country. The other two poverty lines only measure total destitution, and extreme poverty, and are therefore not helpful in measuring the full extent of poverty in the country.

This new information from Stats SA on the UBPL has critical implications for the current national debate around a national minimum wage, linked to a minimum living level, as it suggests a minimum requirement for a family of five of around R4,700 pm, to avoid sinking into poverty.

Low income workers in South Africa do not just support themselves but on average four dependants, and in many cases even more. For a family of five in 2014 the R946 pp/pm figure would require the breadwinner to earn a minimum of R4,730 merely to save his or her family from poverty.

Yet the minimum wage in most sectoral determinations, and even some bargaining council agreements, are way below this broad minimum living level.

It is intolerable that so many workers, even those covered by sectoral determinations - which are supposed to protect the most vulnerable workers - are living below this poverty line, which itself falls below what Cosatu, supported by the work of university researchers, regards as a basic minimum living level. This MLL is at least between R5,000 and R5,500 a month, in 2014 prices (or over R4,500 in 2012 prices).

These latest statistics will make Cosatu even more determined to fight for a national minimum wage (NMW) to help vulnerable workers escape the poverty trap to which current sectoral determinations condemn them, and to protect those thousands of unorganised, casual and temporary workers who are not even protected by the sectoral determinations.

At present 10.9 million workers are employed in the formal sector. Of these, only 2.4 million are covered by Bargaining Council agreements and around 900,000 covered by plant-level agreements only. The wages of 3.5-4.5 million workers are regulated by Sectoral Determinations, and set at pitifully low levels. The wages of the remaining workers are not regulated at all.

The NMW would be popularised amongst workers, employers and government officials, so that everyone would know that no worker could legally be paid below the that level and no worker whose wage is higher than the NMW could have their wages reduced to the amount of the NMW.

Sectoral Determinations, if they remain, could only set wages at a higher level than the NMW.

In addition, while we still have such massive level of unemployment the NMW must be complemented by the urgent introduction of comprehensive social security and a basic income grant, to cover those with no jobs - currently sitting at around eight million.

These statistics are a reminder of how far we still have to go in realising the economic goals of the Freedom Charter and the RDP. We need to build an economy which is driven by development of our manufacturing industry, which creates hundreds of thousands of decent jobs, increases the country’s wealth, distributes that wealth and assets equitably and transforms the lives of all South Africans.

Combined with unemployment over 34%, the eighth highest level in the world, and with inequality the widest in the world, these poverty statistics from StatisticsSA spell disaster for South Africa, even as we celebrate the 60th anniversary of the Freedom Charter, which promised us that “the people shall share in the country`s wealth!” DM

Vavi-table

Footnotes and references:

  1. Economists advising us have raised certain concerns with the report, including a number of technical questions relating to the construction of the survey, and analysis of the data, as well as the problematic construction of Provincial poverty lines, on which we hope to engage Stats SA directly.
  2. See Stats SA National Poverty Lines table.
  • Zwelinzima Vavi
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    Zwelinzima Vavi

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