Thursday, October 22, 2020

Botswana’s household under siege as disposable income remain stagnant

BY BONNIE MODIAKGOTLA

Households in Botswana are under siege ÔÇô saddled by rising unemployment, stagnated wages, widening income inequality, poor savings and an increasing exposure to debts.

While many observers could tell that all is not well in the diamond rich country, Statistics Botswana’s recently released Botswana Multi-Topic Household Survey (BMTHS) Report 2015/2016, released this week, gives authoritative insights into households that are clearly buckling under pressure.

The BMTHS is the most up to date statistics that provide comprehensive set of household and individual level indicators for poverty and labour market. The latest report covers data collected between November 2015 to October 2016. Prior to that, the 2009/10 Botswana Core Welfare Indicators Survey (BCWIS) was the reference point in terms of comprehensive household data.

The BMTHS was carried in 598 enumeration areas, with about 7,060 households sampled, and about 24,720 people interviewed. The response rate was 98 percent. Statistics Botswana reveals that during the survey, it estimated the population size to be 2.1 million against the 2016 projected population size of 2.2 million ÔÇô giving a 6.6 percent difference.

According to the report, the total number of households was around 589,909 against a population of 2.1 million. This gives an average household size of about 4 people. It was discovered that close to 49 percent own houses while 49.9 percent are without their own houses.

Moreover, the data shows that at national level, 65.2 percent of households lived in rented houses ÔÇô a major shift from the last survey done in 2009/10 where only about 39 percent lived in rented houses. More shockingly about 80 percent of households in cities/towns were renting, and 72.4 percent in urban areas.

Using the International Labour Organisation (ILO) standards to determine labour force activities, the report focused on people aged above 15 of whom the ILO says are eligible to work. The labor force is made up of the working class and the unemployed, and it is further divided into economically active and economically inactive people. The economically active are people who are either employed or actively seeking employment, while the economically inactive refers to people who are not part of the labour supply (neither employed nor seeking) but could be in the future.

The BMTHS report reveals that the country’s population that is above 15 years is 1.3 million, made up of 836,734 of economically active people, a 62 percent representation. Among those eligible to work, only about 71 percent or 689,528 were employed, leaving about 147,206 or 15 percent scrambling for the elusive jobs.

On the other hand, the report found out that about 512,274 or 38 percent were classified as being economically inactive population. Of this group, 27.4 percent were students, followed by discouraged job seekers at 133,276 or 26 percent, and those who were sickly to work coming at 21 percent or 107,580.

Despite an estimated 689,528 people employed, the report highlights that a total of 510,953 were recorded as wage earners. In a startling discovery, 25.7 percent of salaried workers earn between P1001 to P2000, followed by 24.9 percent of employees who earn in the range of P501 to P1000, while about 14.9 percent fall in the earning bracket of P2001 ÔÇô P4000. The data from Statistics Botswana paints an unsettling picture: around 83 percent of employees earn less than P10,000.

The report shows that of the 510,953 employees, 74.2 percent are in formal employment, and it is this group that on average earns higher salaries compared to the informal sector. At the time of survey, average earnings for citizens stood at P4,501 for all employees in their main activity and for secondary activity the average earning was P1,681.

The BMTHS 2015/16 report found that about 280,482 people were unemployed, and of these, 147,206 or 52.5 percent were actively seeking work and 133,276 or 47.5 percent were discouraged job seekers. Statistics Botswana put the official unemployment rate at 17.6 percent, but added that if you include the discouraged job seekers in the calculations, then the unemployment rate is as high as 33.5 percent.

The report discloses that the most affected by unemployed is young people, with 48.1 percent of people aged between 18 ÔÇô 19 desperately looking for jobs, followed by the 20-24 age group at 37.3 percent while the 25 ÔÇô 29 group was at 23.2 percent. In terms of unemployment by education level, those educated up to junior secondary level represented 39.5 percent of the unemployed, followed senior school leavers at 22.9 percent while unemployed graduates represent 16.6 percent.

The Statistics Botswana’s most comprehensive report to date also offered insights on earnings and expenditure of households. Cash earnings contributed the most to households’ income at P4,493.80, a 69 percent contribution to the average gross income of households at the national level which is estimated at P6,510.94.

From the gross income, it was disclosed Batswana spend about 28.8 percent on income tax, 26.54 percent on loan repayments, 15.35 percent on insurance, and about 14.74 percent on pension contributions and investments. The report revealed that at the national level, there was a decline in the households’ propensity to save as shown by the decline in savings compared to household expenditure.

Household disposable income ÔÇô the funds left after paying taxes and pension contribution ÔÇô is reported at P5,836.37, but a breakdown of this figure reveals that disposable income for cities and towns is P9,630.41, for urban villages is P5,731.47 and P3,250.84 for rural areas. With the little left as disposable income, the report discloses that Batswana spend the most on transport, allocating about 23.9 percent to it, followed by housing at 17.8 percent and food gets about 12.8 percent of budget.

The 2015/2016 BMTHS revealed that income inequality has increased – with a Gini coefficient of 0.667 ÔÇô making the country one of the top three countries with high inequality. There was also an increase in consumption inequality which was recorded at about 0.522 in terms of the Gini Coefficient.

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