South Africans need R20,000 a month to live a ‘decent’ life

A new study has found that South Africans need to earn a net living wage of at least R20,000 per month to maintain a decent standard of living.

This equates to around R125 per hour for a 40-hour work week, more than four times higher than the country’s legislated minimum wage of R30.23 per hour, which works out to just under R5,000 per month.

The Living Wage South Africa Network (LWSAN) conducted a study of more than 2,000 South Africans to determine a generally acceptable living wage.

The organisation defines the living wage as “the remuneration required for an individual and their family to attain a frugal, but dignified standard of living”.

A living wage allows a household to cover both its regular monthly needs and costs that arise from unforeseen circumstances, such as medical emergencies.

In an interview with Newzroom Afrika, LWSAN chairperson Professor Ines Meyer explained how the study was conducted and the standard living wage figure calculated.

“The calculations that we base our amount on are based on what people themselves need to be able to make it possible to live the life that they value, at least to some extent,” Meyer said.

“That includes social relationships, housing that makes for a good life, political participation, access to knowledge and information, access to healthcare, and so forth.”

LWSAN gave each of the 2,000 participants a “quality of life index” based on what they believed they needed to earn to achieve a dignified standard of living.

This was then plotted against each participant’s actual monthly take-home pay to pinpoint exactly where the shift towards achieving this standard of living would occur.

Most respondents earning less than R14,000 per month were unable to achieve a life that they valued, while all respondents earning more than R25,000 per month could, to an extent.

“We settled on the midpoint of R20,000 because it adequately satisfies the four main criteria that qualify the living wage at a national level,” Meyer said.

These include realising a life of value, saving money for the future, being prepared for unforeseen circumstances, and having a decent and dignified standard of living.

The disparity between living and minimum wage

The study conducted by LWSAN revealed a large discrepancy between what South Africans think they need to live a decent life and what many of them actually earn.

While the living wage is something of an ideal for many low-income households in South Africa, it is not enshrined in law, unlike the minimum wage.

“The minimum wage is a legislated amount, and is a compromise between business, organised labour, and the government,” Meyer explained.

“It is a legal amount, and it needs to be low enough so that businesses can afford it, because everyone has to comply with it.”

While the minimum wage is a mandatory amount that all employers must follow, Meyer said the living wage is entirely voluntary for employers who wish to treat their employees with greater dignity.

However, she argued that a higher adoption rate of the living wage amongst employers would drive up South Africa’s economic growth.

Many businesses may be hesitant to pay their employees more when they are not legally required to, especially those which are heavily dependent on human capital.

However, Meyer said these companies should treat the living wage as something more akin to an investment in the growth of not just the business, but the country at large.

“When people earn at least the living wage, they can spend more on previously unmet needs, which creates greater demand on production and for labour, which creates more jobs, and so on,” Meyer said.

“If people earn enough not to stress about money, they also become more productive employees. It is an investment rather than a cost to the business.”

Through this, Meyer believes that poverty will decline as more disposable income flows into the economy, increasing the standard of living and boosting South Africa’s economic growth.

While many employers may still not be on board with this idea, either because they cannot afford it or simply do not want to, some sectors are reportedly beginning to adapt.

According to Meyer, there has been an uptick over the last two years in employers adjusting their internal minimum wages to better match the living wage standard set by LWSAN.

This is especially evident in the financial services sector, with major banks such as Standard Bank, Absa, Investec, Nedbank, and FNB all offering minimum pay of over R20,000.