Poverty report strengthens COSATU’s case for national minimum wage and comprehensive social security

Stats SA has recalculated its poverty lines using 2011 as the baseline, which shows that more than half the population (53.8%) live 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 National Development Plan) 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 on a very conservative measure, lower than the calculations of university-based institutions on a basket of goods and services needed for a family to survive.

Nevertheless, we welcome Stats SA’s recalculation of their poverty lines as an important step towards establishment of a realistically set official national minimum living level.¹

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

• “Extreme poverty” defined as only being able to afford a very minimal basket of food, and nothing else;

• “Austere poverty” defined as a level below which one has to sacrifice some food to obtain some basic non-food items;

• “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 kilo-calories a day needed to stay alive.

In 2011 this figure was R321 per month. Stats SA rebasing of this figure increased it by around 10% to R355 in 2011. Based on this recalculation, the food poverty line in 2014 would be about R440 per person per month (see Stats SA National Poverty Lines table below).

Statistics SA National Poverty Lines table

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 in 2011 to 21.7% in 2014.

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 from R443 to R501 in 2011 prices per person per month (pp/pm). This is a 13% increase.

Therefore the lower-bound poverty line in 2014 (originally calculated as R544) would increase to around R615 pp/pm. The Report calculates that the percentage living in poverty based on this extremely low poverty line increased from 32.3% [the original 2011 calculation] to 37%.

Statistics SA’s third “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 to R779 pp/pm in 2011, to around R946 pp/pm in 2014, which is still a very basic, minimal amount.

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

We believe that while this UPBL 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 UPBL has critical implications for the current national debate around a national minimum wage.

Low income workers in South Africa do not just support themselves, but on average have 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 (or R4,966 in 2015, using a CPI of 5%) 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 regards as a basic minimum living level, supported by the work of university research institutions, which is roughly between R5,000 and R5,500 a month in 2014 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, only 10.2 million workers are employed in the formal sector. Of these, only 2.4 million are covered by Bargaining Council agreements and 900,000 covered by plant-level agreements only.

The wages of 3.5 million workers are regulated by Sectoral Determinations, and those of 3.4 million workers are not regulated at all, but are paid whatever pittance their employers decide.

The NMW would be popularised amongst workers, employers and government officials so that everyone would know that no worker could legally be paid below 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 levels 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 8 million.

These statistics are a reminder of how far we still have to go in realizing the economic goals of the Freedom Charter and the Reconstruction and Development Programme. We need to build an economy which is driven by development of our manufacturing industry, which creates 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 36%, the 8th highest level in the world, and with inequality the widest in the world, these 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!”

Vavi is the General Secretary of COSATU. The opinions expressed in this article are solely those of the author. No inference should be made on whether these reflect the editorial position of GroundUp.