Can one live off the minimum wage in SA?

How much money is left after meeting one’s basic nutritional needs?

At the beginning of every year, minimum wages are updated in many countries. However, the concept of a minimum wage is not ubiquitous: we won’t find the lowest legal remuneration in Nordic countries, Italy, Switzerland or Singapore. Although South Africa is not among the countries that ratified the United Nations Minimum Wage Convention, this concept is well-known and practised there.

Nevertheless, the question whether a minimum wage is high enough to allow us to meet the basic nutritional needs still remains. Taking a closer look at prices of the eight universal food groups in 52 countries, it turns out that in some countries the minimum wage is barely high enough to purchase a modest nutritious food basket. How does South Africa look in comparison to other countries?

Prices of basic food products

For the purpose of this article, an example of a shopping basket filled with items from the eight universal food groups: bread, milk, rice, eggs, cheese, meat, fruits and vegetables is used. Even though this list is short and frugal, these products meet the nutritional needs of an adult and the prices are constantly monitored around the world.

In South Africa, for a basket filled with basic items from the list above, you will have to pay around R1 159.15.

Contents of the shopping basket and the average prices:

Milk (10l) — R136.20
Bread (10 loaves, 500g each) — R125.60
Rice (2.5kg) — R30.29
Eggs (20) — R44.53
Cheese (1kg) — R96.50
Poultry and beef (6kg) — R482.01
Fruits (6kg) — R116.20
Vegetables (8kg) — R127.82

The ratio of food prices to minimum wage

Since January 1, 2019, the minimum wage in South Africa has been R3 460.00 (net). Considering the average prices of food in South Africa, expenditure on basic food products makes 33.5% of the minimum wage, which places South Africa 36th on the list of 52 countries.

Read: Understanding the National Minimum Wage Act

According to the ranking, Australia, Ireland and the United Kingdom are countries where the minimum wages are the most favourable. Taking into account local prices, employees with the lowest possible remuneration will spend 7% of their salary for the very same basket as people from other parts of the world.

Among countries that placed lower than South Africa were Indonesia (38th place), Pakistan (40th), Russia (42nd) and India (50th place).

The Philippines and Nigeria are in the worst situation, though. The minimum wage in Nigeria is so low that it doesn’t cover the costs of even the most basic shopping basket.

Methodology

This report uses the latest information about minimum wage rates published on official government websites from 52 countries in Europe, Asia, the North and South Americas, Africa and Australia. There are a few countries which update their rates on a different date than January, 1. In Greece, the minimum wage hasn’t changed since 2013. The food basket used for this report represents the average prices compiled by thousands of numbeo.com users. For currency conversion, we used the average exchange rate for December 2018.

This article was first published here.

Source: moneyweb.co.za