AN  ANALYSIS  OF  HOUSEHOLD  EXPENDITURE  

AND  INCOME  DATA

Dr.  Pali Lehohla

Household  – based  sample  survey

Conducted  once  every  5  years

Previous  LCS  conducted  2008/2009

Countrywide  survey

Background

Data  collection  covers  a  period  of  12  monthOctober  2014  to  October  2015

01 To profile poverty and inequality in South Africa

02 To  serve  as  in  input  in  the  reweighting  of  the  CPI  basket  of  goods  and  services

Objectives

03 To  inform  the  development,  benchmarking  and  maintenance  of  household  national  accounts

Poverty  Trends  Report

Subjective  Poverty  Report

Men,  Women  and  Children  report

Future  products  from  LCS  2014/15

Reduce  the  population  living  below  the  lower-­bound  poverty  line  (LBPL)  to  0%  by  2030

Reduce  Gini  coefficient  to  0.6  by  2030

Increase  the  share  of  national  income  of  the  bottom  40  percent  from  6  percent  to  10  percent

Raise  per  capita  income  from  R50  000  in  2010  to  R120  000  by  2030

Linkages  to  the  NDP  and  SDGs

Linkages  to  the  NDP  and  SDGs

Goal  1

Goal  10

Goal  2

Methodology

Combination  of  diary  and  recall  methods  were  used  for  collecting  data

Data  collection  instruments• Household  Questionnaire  (HHQ)• Reflects  households’  acquisitions  of  semi  durable  and  durable  items  (and  other  household  information)  during  the  12  months  prior  to  the  survey  period  

• Weekly  Diary• Reflects  households’  daily  acquisitions  for  the  survey  period  and  payments  on  semi-­durable  and  durable  items  during  the  survey  year

• A  household  completes  a  diary  for  the  period  of  two  weeks

Limitations

Respondent  fatigue  often  leads  to  under-­reporting  on  frequently  purchased  items  (food,  beverages,  personal  care  items)

Respondents  have  difficulty  estimating  their  dwelling  units  value

Higher  non-­response  rates

Response  ratesProvince LCS  2014/2015  (%)

South  Africa 84,9Western  Cape 79,1Eastern  Cape 92,7Northern  Cape 90,4Free  State 86,9

KwaZulu-­‐Natal 89,6North  West 90,0Gauteng 65,3

Mpumalanga 91,6Limpopo 95,6

The  challenge  of  non-­‐response  was  especially  problematic  in  Gauteng

Gauteng  accounts  for  over  a  third  of  all  household  expenditure  in  the  country

Lower  responses,  especially  amongst  high-­‐income  households  in  Gauteng,  means  we  could  see  larger  underreporting

Spending  Patterns  In  South  Africa

Income  and  expenditure

In  2015,  total  annual  household  income  by  South  African  households  amounted  to  R2.3  trillion

Average  annual  household  income  was  R138  168

Median  income  R54  349

HOUSEHOLD  INCOME

138  168

79  152

86  926

90  156

98  529

101  088

103  912

107  561

193  771

222  959

50  000 100  000 150  000 200  000 250  000

South  Africa

LimpopoNorth  West

Eastern  CapeFree  State

KwaZulu-­‐NatalNorthern  CapeMpumalanga

GautengWestern  Cape

Annual  income  (Rands)

Province

Average  annual household  income  by  province

Average  annual  household  income  by  sex  of  household  head

Male-­headed  households  earned  significantly  more  than  female-­headed  households  in  2015

R165  853 R98  911

Males Females

Black  African

Coloured

Indian

White444 446

271 621

172 765

92 983

Average  annual  household  income  by  population  group  of  household  head

0 50000 100000 150000 200000 250000 300000 350000 400000 450000

Average  Income

Average  annual  income  (Rands)

In  2015,  total  annual  household  expenditure  by  South  African  households  amounted  to  R1.72  trillion  

Average  household  consumption  expenditure  was  R103  293

Median  expenditure  R42  522

HOUSEHOLD  EXPENDITURE

350  937

195  336

124  445

67  828

White-­headed  households  (R350  937)  spent  five  times  more  than  black  African-­headed  households  (R67  828)  and  three  

times  more  than  the  national  average

Black  African

Coloured

Indian

White444 446

271 621

172 765

92 983

Average  annual  household  consumption  expenditure  and  income  by  population  group  of  household  head

0 50000 100000 150000 200000 250000 300000 350000 400000 450000

Average  Expenditure Average  Income

Households  in  Western  Cape  (R163  220)  spent  more  than  twice  the  amount  spent  by  households  in  Limpopo  (R61  011)  and  North  West  (R69  192).

WCR163 220

GP

R140 676

Average  annual  household  consumption  expenditure by  province

ECR72,390

NCR81,258

KZN

73,503

MP

R83,517

LP

R61,011

NW

R69,192

R85,298FS

Urban  Informal

Traditional  Areas

Rural  Formal

Urban  Formal R140,617

R75,349

R44,710

R38,739

Households  in  urban  formal  areas  (R140  617)  spent  almost  four  times  more  than  households  in  urban  informal  areas  (R38  739)  and  three  times  

more  than  households  in  traditional  areas  (R44  710)

Average  annual  household  consumption  expenditure by  settlement  type

Male-­headed households  spent one  and  half  times  more  than  female-­headed  households

R121  363

R77  671

Males Females

Average  annual  household  consumption  expenditure by  sex  of  household  head

23,61

22,97

18,69

22,37

20,63

19,96

26,18

33,59

12,86

46,87

84,60

0,00

20,00

40,00

60,00

80,00

100,00

Black  African Coloured Indian/Asian White

Percen

tage  %

Almost  half  of  black  African-­‐headed  households  (46,58%)  fell  within  the  lowest  two  expenditure  quintiles  combined

Highest

Fourth

Middle

Second

Lowest

Percentage  distribution  of  households  by  expenditure per  capita  quintiles  and  population  group  of  the  household  head

Inequality  is  also  found  within  Population  Groups

0 50 100 150 200 250 300 350 400Category  1

R124  445

Coloured

MeanMedianR65975 R  350 937

White

Median MeanR256  159

MeanR195  336

Indian

MedianR122  476

MeanR67  828

Black  African

MedianR36 501

Average  annual  household  consumption  expenditure  by  population  group  of  household  head  Median  vs  Mean

Rands  ‘000

Distribution  of  household  consumption  expenditure  by  expenditure  groups

In  2015,  total  annual  household  expenditure  by  South  African  households  amounted  to  

R1.72  trillion  

Housing  and  utilities  amounted  to  approximately  R558.8  billion  in  monetary  terms  (32,6%)

Transport  was  the  second  largest  main  expenditure  group(16,29%)

Miscellaneous  goods  

and  services  (14,7%)

Food  and  non-­‐alcoholic  Beverages  (12,9%)

Percentage  distribution  of  total  annual  household  consumption  expenditure  by  top  4  expenditure  groups

Food  and  non-­alcoholic  beverages

Housing    water    

electricity    gas  and  other  fuels

Transport

Miscellaneous  goods  and  services

0%

20%

40%

60%

80%

100%

IES2005/06 LCS2008/09 IES2010/11 LCS2014/15

Housing  remained  the  largest  contributor  since  2009

Historical  Spending  Patterns  In  South  Africa  from  2006  to  2015

Food and non-alcoholic beverages, 12.9%

Housing water electricity gas and other fuels,

32.6%Miscellaneous goods and services,

14.7%

*Other unclassified Expenses, 0.1

Clothing and footwear, 4.8

Communication, 3.4

Furnishings household equipment and routine maintenance of the house, 5.2

Recreation and culture, 3.8

Transport, 16.3%

Current  Spending  Patterns  In  South  Africa:2015

Alcoholic bev. tobacco and narcotics,

0.9

Edu

catio

n,

2.5

Health, 0.9

Res

taur

ants

and

hot

els,

2.1

*

0%

5%

10%

15%

20%

25%

30%

35%

40%

Miscellaneous  goods  and  services

Clothing  and  footwear

Transport Housing,  water,  electricity,  gas  and  other  fuels

Food  and  non-­‐alcoholic  beverages

Decile  10Decile  1

Significant  differences  exist  in  proportions  of  certain  categories  between  the  lowest  and  highest  expenditure  deciles  

Expenditure  Categories

Household  Consumption  Expenditure

selected  expenditure  categories  examined

Households  in  the  Western  Cape  (R20  976)  spent  almost  double  the  amount  that  households  in  Limpopo  (R10  862)  spent  on  this  category  

14  202

10  862

11  002

11  643

12  382

13  153

13  398

14  181

15  734

20  976

0 5 000 10 000 15 000 20 000 25 000

South  Africa

Limpopo

Eastern  Cape

North  West

KwaZulu-­ Natal

Northern  Cape

Free  state

Mpumalanga

Gauteng

Western  Cape

Average  annual  expenditure  (Rands)

Average  annual  consumption  expenditure  on  food,  beverages  and  tobacco  by  province

Black  African17,9%

White7,1%

Black  African-­headed  households  had  the  highest  proportion  (17,93%)  across  all  population  groups,  while  white-­headed  households  spent  the  most  in  monetary  terms  (R  24  998)

(R12  163)R24  998

Average  for  All  Population  Groups  13,75%  (R14  202)

Proportion  of  total  annual  household  consumption  expenditure  on  food,  beverages  &  tobacco  by  selected  population  group  of  household  head

Urban  Informal

Traditional  Areas

Rural  Formal

Urban  Formal

9,0%

7,5%

5,0%

4,2%

Households  in  urban  informal  areas  (9,03%)  consumption  expenditure  was  almost  twice  the  proportion  of    the  national  average  (4,78%),  while  urban  formal  areas  (4,21%)  had  a  proportion  that  was  below  the  national  average  

Proportion  of  total  annual  household  consumption  expenditure  on  clothing  and  footwear  by  settlement  type

32,6%

22,4%

24,5%

25,2%

27,1%

28,8%

29,9%

31,2%

34,2%

36,7%

0,00 5,00 10,00 15,00 20,00 25,00 30,00 35,00 40,00

South  Africa

Free  state

Northern  Cape

North  West

Mpumalanga

Eastern  Cape

KwaZulu-­ Natal

Limpopo

Western  Cape

Gauteng

Province

Housing  has  the  largest  share  of  household  consumption  expenditure,  South  Africans  spent  almost  a  third  (32,55%)  

of  their  average  annual  household  consumption  expenditure  on  this  expenditure  category

Proportion  of  total  annual  household  consumption  expenditure  on  housing,  water,  electricity,  gas  and  other  fuels  by  province

Male  headed  households  spent  on  average  R13  447  more  than  their  female  counterparts,  although  female-­headed  households  (33,14%)  consumption  expenditure  has  a  slightly  greater  proportion  as  compared  to  male-­headed  

households  (32,29%)

32,3% 33,1%

Proportion  of  total  annual  household  consumption  expenditure  on  housing,  water,  electricity,  gas  and  other  fuels  by  province

935

287

430

529

616

707

821

1  025

1  795

2  107

0 500 1  000 1  500 2  000 2  500

South  Africa

Limpopo

Eastern  Cape

North  West

Mpumalanga

KwaZulu-­Natal

Northern  Cape

Gauteng

Free  State

Western  Cape

Average  annual  expenditure  (Rands)

Province

On  average  Western  Cape  spent  R2  107  per  annum  which  is  seven  times  more  than  Limpopo  (R287)

Average  annual  household  consumption  expenditure  on  health  by  province

Urban  Informal

Traditional  Areas

Rural  Formal

Urban  Formal

18,7%

18,7%

16,9%

16,0%

Households  in  urban  informal  (18,66%)  and  rural  formal  (18,65%)  areas  spent  the  highest  proportion  of  expenditure  on  transport  as  compared  to    

other  settlement  types

Proportion  of  total  household  consumption  expenditure  on  transport  by  settlement  type

60,4%

77,6%

53,2%

58,0%

60,8%

39,6%

22,4%

46,8%

42,0%

39,2%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Black  African

Coloured

Indian  Asian

White

South  Africa

Public  Institutions Private  Institutions

Coloured-­‐headed  households  spent  77,6%  on  public  educational  institutions,  while  Indian/Asian-­‐headed  households  only  spent  53,2%

Proportion  of  total  household  consumption  expenditure  on  education  attributed  to  public  and  private  institutions  by  population  group  of  household  head  

In  2015,  on  average  household  consumption  expenditure  amounted  to  R103  293,  while  average  annual  household  income  was  R138  168

Black  African-­headed  households  accounted  for  over  half  (52,8%)  of  all  household  consumption  expenditurein  2015  and  spent  on  average  R67  828

Western  Cape  and  Gauteng  combined  accounted  for  the  majority  of  the  total  household  consumption  expenditure  (57,8%)  

In  terms  of  average  annual  consumption  expenditure,  households  in  Western  Cape  are  the  richest  (R163  220)  while  the  poorest  province  was  Limpopo  (R61  011)

In  2015,  on  average  men  earned  almost  twice  of  what  women  earned  from  work,  R126  817  and  R62  568  respectively

Conclusion