Fuel prices, increases in “sin” tax (including now a so-called “sugar tax”) and a rise in the rate of VAT are just a few factors that have pushed up inflation and the Consumer Price Index to alarming levels.
As a consequence, with each percentage point increase, we all tighten our belts and make savings and lifestyle changes where we can. We cut costs. We reduce our spending. We limit the number of trips we make, whether in private vehicles or on public transport, because petrol has become prohibitively expensive. We restrict our diets and cut out anything remotely extravagant, which for some people is already just one daily portion of meat. For many South Africans, even that is a luxury.
As input costs into food production rise, so our shopping baskets become smaller. Our nutrition is compromised. Our health suffers. In 2006 a loaf of bread cost R5.75, but today is as high as R14. That’s an increase of around 144percent. Which of us has had an annual pay rise even above 10percent in all that time?
The net result of price increases resulting in domestic (and commercial) cost cutting is job losses. When demand is reduced, supply slows down and workers are laid off. And the poverty cycle is perpetuated.
But even if you are lucky enough to keep your job, there is the phenomenon of the working poor, where households remain poverty stricken, even when one or more of their numbers is working. Living costs simply outstrip income which has to be stretched further and further.
Critical expenses, including school fees, are compromised, resulting in learners dropping out of school, failing to complete even matric and ending up, unqualified and unskilled, on the job market. And once again, the poverty cycle is perpetuated.
During times of high inflation, job mobility also contracts.
Talent is dissuaded from travelling further, or from relocating as a job offer might require, and so opportunities for a higher salary may be lost and positions remained either unfilled or taken by a candidate who is not the best person for the job.
Jobs are the single most important determinant of living standards. A fairly remunerated job and/or multiple bread winners in one household can be the difference between economic stagnation or a path to prosperity for both a household and a country.
Economic growth is imperative for our country to get back on its feet. With economic growth comes job creation. With work comes, hopefully, upward economic mobility.
Every government in every country must strike its own balance between fiscal policy, levels of interest rates, trade agreements and all the other mechanisms of government that feed into an overall healthy economic framework and environment that creates jobs.
My song for this week is Ringo Madlingozi’s Ngiyagodola, translated as I am cold and freezing. After the past 10 years of economic downturn, we are all feeling the cold.
Managing not the cost of living but simply the cost of existing for many South Africans is a daily reality. Our new Cabinet has an unenviable task in stimulating growth at a rate that will create jobs. We welcome the Energy Minister’s announcement last week that the government is looking at capping the price of unleaded fuel, and this - combined with outcomes from the Jobs Summit and upcoming Investment Summit - we hope will contribute to the turnaround we need.
First ease the pain, and then take it away completely with universal employment.
Eustace Mashimbye is the chief executive of Proudly South African.
The views expressed here are not necessarily those of Independent Media.