An Introduction to the Decent Standard of Living threshold and the Decent Standard of Living Index

1. An Introduction to theDecent Standard of Living threshold and the Decent Standard of Living Index Social Security Seminar Johannesburg 22th November 2018

2. Overview • We attempt to quantify a Decent Standard of Living (DSL) threshold in monetary terms • We update the DSL to 2018 amounts using a modification of the Consumer Price Index – a Decent Standard of Living Index (DSLI) • Possible uses • Next steps

3. What is the DSL threshold? • The DSL is the first attempt in South Africa to quantify in monetary terms the resources required for a socially derived decent standard of living using the Socially Perceived Necessities (SPNs) approach • Moves beyond a focus on resources needed for food (R531 per person per month in 2017 prices) (Stats SA, 2017: 8) • Also moves beyond the lower bound and upper bound poverty lines (R758 and R1138 respectively per person per month in 2017 prices) (Stats SA, 2017: 8)

4. The foundations • Builds on several earlier studies involving qualitative and quantitative research: • 48 focus groups across South Africa about what comprises an acceptable standard of living • A module in 2006 South African Social Attitudes Survey (SASAS) to determine which of 50 items are socially perceived necessities (piloted in 2005) • Modules in 2008/09 and 2014/15 Living Conditions Surveys (LCS) to measure possession and lack of the SPNs

5. Foundations – the focus groups • Urban and rural areas • Women and men • Conducted in 9 of the 11 official languages • Groups with low income and high income people • These informed the design of the SASAS module about socially perceived necessities

6. Foundations – the focus groups • Eastern Cape (Mzomhle, Mdantsane, Umthatha, Fort Beaufort) • Gauteng (Melville, Winnie Mandela, Diepsloot, BraamFischerville, Chiawelo) • KZN (Phoenix, Chatsworth, Dududu, Seven Oaks, Clermont, Luganda, Umlazi) • Limpopo (Duthini, iTsani, Mavambe, Mchipisi, Thohoyandou) • North West (Lokaleng) • Western Cape (Scottsville, Phillipi, Malibu, Heideveld, Ocean View, Milnerton, Kaapzicht Farm, Khayelitsha, Gugulethu)

7. Foundations – South African Social Attitudes Survey 1/3 • The SASAS 2006 module attempted to represent the breadth of issues raised in the 48 focus groups and a range of probable ‘basics’ through to probable ‘luxuries’ • The module did not attempt to address issues of quantity and quality and made no assumption about the provider of the necessities • The module had 50 definitional questions: 33 about possessions, 4 about activities, 8 about the neighbourhood, and 5 about relationships with friends and family

8. Foundations – South African Social Attitudes Survey 2/3 • In the SASAS 2006 module, 36 of the 50 items were defined as essential by more than half the population • For the 36 items that were defined as essential by 50% or more of the population, the scale reliability coefficient (alpha) was calculated to be 0.9201 • The percentage of the population defining each of the 49 common items as essential in 2005 and 2006 correlated 0.96 (Spearman’s rho)

9. Foundations – South African Social Attitudes Survey 3/3 Question: Which of these items should someone in South Africa have or have access to for an acceptable standard of living? Answers: essential / desirable but not essential/ neither essential nor desirable Results: Twenty-one items (applicable to any age-group) were defined as essential by two-thirds or more of respondents. This is a stringent threshold for Socially Perceived Necessities (SPNs)

11. The LCS 2014/15 analysis • Statistics South Africa’s LCS 2008/09 and LCS 2014/15 contain information on • possession of these SPNs • reasons for lacking each SPN (‘don’t have don’t want’ or ‘don’t have can’t afford’) • income and expenditure • This enabled us to explore ways of expressing the Decent Standard of Living in monetary terms

12. Finding 1: Many people in 2014/15 lacked the SPNs

13. Finding 1: Many people in 2014/15 lacked the SPNs • Only around 3% of the population have all 21 SPNs - approximately 1.7 million people • Just over a quarter (26%) of the population have 18 or more SPNs - approximately 14 million people • A much larger proportion (42%) of the population have 16 or more SPNs - approximately 23 million people

14. Finding 2: Possession of SPNs and Income - the DSL measure (2015 prices)

15. Finding 3: The speed of acquisition varies

16. Updating the DSL to 2018 prices 1/2 • We could have updated the DSL income amounts using the Consumer Price Index (CPI) • Instead we created a variant of the CPI – the DSLI – which takes into account the expenditure patterns of people at different thresholds of adequacy (with 21 SPNs, 20 SPNs, 19 SPNs etc)

17. Updating the DSL to 2018 prices 2/2 • Calculated median per capita household expenditure for people living in households with 21 SPNs, 20 SPNs, 19 SPNs etc. • Calculated expenditure shares, using 12 expenditure categories (the same categories that Stats SA use for the CPI)

18. Expenditure Contributions to the DSLI, for those in households with 21 SPNs

19. Expenditure Contributions to the DSLI, for those in households with 0 …21 SPNsSPNs

20. Headline results (April 2018 prices) R7,043 per person per month MEDIAN PER CAPITA INCOME associated with households possessing all 21 Socially Perceived Necessities R2,555 per person per month MEDIAN PER CAPITA INCOME associated with households possessing 18 of the 21 Socially Perceived Necessities R1,466 per person per month MEDIAN PER CAPITA INCOME associated with households possessing 16 of the 21 Socially Perceived Necessities

21. Uses of the DSL (and DSLI) • An estimate of income associated with a socially derived decent standard of living can be used as a benchmark (among others) for assessing adequacy of wages and social security levels • A lens for monitoring progressive realisation of achieving a decent standard of living • A lens for exploring priorities for public goods • An estimate that can be refined over time

22. Selected benchmarks of monthly per capita income or earnings in SA as a proportion of the median per capita income associated with a decent standard of living (21 SPNs) at R7,043 per month

23. Next steps 1/4 • The DSLI report will be made publicly available

24. Next steps 2/4 • The DSL amount can be updated each year using the DSLI and the relevant CPI component data from Statistics South Africa

25. Next steps 3/4 • Periodically, the definition of the DSL can be refreshed: • Refresh the socially perceived necessities (new module in SASAS, preceded by focus groups) • Measure possession of the refreshed set of SPNs (LCS) • Then update the analysis of relationship between possession of SPNs, income and expenditure to generate an income amount for the refreshed DSL • This would only need to take place every 5 or 10 years

26. Immediate next steps 4/4 • Sub-group analysis to profile those with/without a decent standard of living (e.g. by area type, gender, employment, presence of children, social grant eligibility, personal income tax payers) • Monitor progress towards a DSL (alongside other important benchmarks such as the food poverty line) • Further exploration of implications for policy

27. Thank You