Why 30 million South Africans are trapped in poverty – even with a national minimum wage

The latest data from the Pietermaritzburg Agency for Community Social Action (Pacsa) shows exactly why millions of South Africans identified in a recent Stats SA poverty report are trapped in low standards of living.

The Pacsa Monthly Food Price Barometer for August 2017 showed that the group’s food basket decreased by R31.65 (-1.59%) from R1,995.56 in July 2017 to R1,963.92 in August 2017.

Year-on-year (y/y) the Pacsa food basket increased by R21.49 (1.11%) from R1,942.42 in August 2016 to R1 963.92 in August 2017. Currently the August 2017 price of the Pacsa Food Basket is 19.2% or R315.82 higher than those prices in November 2015 when the impact of the drought started reflecting on supermarket shelves (R1,963.92 vs. R1,648.10), it said.

Despite the small reprieve, Pacsa said that many South Africans were trapped in poverty, with many, mostly black South Africans being paid what it calls a “poverty wage”, that barely meets the minimum food line requirements as laid out by Stats SA.

Further, the proposed national minimum wage level proposed by the South African government, at R3,500, won’t do anything to change this, it said.

Pacsa has maintained that, because many poor households are dependent on one salary, a South African minimum wage needs to be around R8,000 a month for a family of 5 to live a dignified life.

Cost of living table: Pacsa, August 2017

Rooted in poverty

Statistics South Africa’s inflation-adjusted poverty lines in April 2017 put the food poverty line (the level below which individuals cannot secure enough food) at R531 per month, and the upper bound poverty line (the level below which individuals cannot secure food and non-food items) at R1,138 per month.

Statistics SA’s latest Poverty Trends in South Africa report also showed that one quarter of South Africa’s population (25.2% or 13.8 million people) live below the food poverty line; and 55.5% (30.4 million people) live below the upper bound poverty line.

For black South Africans, 64.2% (around 29 million people at mid-year population estimates for 2017) live below the upper bound poverty line, Pacsa said.

Combining these figures with employment statistics, Pacsa calculated that a single salary in the average black South African household needs to support 4 people.

“In this context, the level of the wage paid to the employed worker becomes extremely important,” Pacsa said.

“Baseline wages for the majority of black South African workers, when dispersed through a family, is a poverty wage. The median wage for Black South Africans is R2,900 a month – dispersed through a family of 4, the wage is R763.16 per capita per month (the upper bound poverty line is R1,138 per capita per month).”

“This figure is extremely low if we consider that the monthly cost of a basic but proper nutritious diet for a very active man is R690.52 in August 2017,” it said.

Making matters worse, for black South African households, the August 2017 Pacsa Minimum Nutritional Food Basket for a family of 4 persons (R2,392.95) would take up 68.4% of the R3,500 proposed NMW, the group said.

“If we add just two critical household expenditures to the food costs: water and electricity (R674.13 at Pietermaritzburg 2017/18 tariffs) and transport to get to work (20 direct return trips at R24 = R480 at Pietermaritzburg 2017/18 tariffs), combined these total R3,547.08 a month.”

This means that the proposed national minimum wage will trap working families in ever deeper cycles of poverty; ill-health and debt, Pacsa said.

“Poverty wages do not allow workers and their families to eat properly as transport, electricity; education expenses and other essential costs compete viciously with the food budget. Poverty wages have severe implications for productivity and the ability of workers to resist illnesses; including the ability of workers to buffer shocks and save for retirement.”

“Poverty is worsening. You cannot disconnect rising poverty levels from the economy. The economy is driving and deepening poverty,” the group said.

Read: What you’d need to earn to pull yourself out of poverty in South Africa