The majority of South Africa’s most vulnerable households are being hit hardest by Eskom’s electricity price increases, which spread to the general public in July via municipal tariff increases. Eskom increased prices by 18.65% for direct consumers in April 2023, while municipalities increased rates at parity with their customers starting in July.
The Pietermaritzburg Economic Justice & Dignity Group (PMBEJD) released its most recent Household Affordability Index, which shows that the tariff increases have reduced what little disposable income households did have.
The PMBEJD said that roughly a third (32%) of the 2023 national minimum wage increase was completely eliminated due to the size of the tariff increases, forcing minimum wage workers to choose between buying food and power.
The PMBEJD reported that the National Minimum Wage increased annually by R2.23 per hour, or 9.6%. However, this was effectively lowered to R1.52 per hour when the 15% increase in the electricity bill was taken into account.
To demonstrate this, the team displayed the R374.64 total of the 2023 NMW increase on a payment schedule of 21 working days.
The annual energy rate rise, which went into effect on July 1, 2023, increased a worker’s power bill by R119.00, making 350 kWh cost R906.92 instead of R787.92 previously (based on Pietermaritzburg numbers of 15.1%).
Thus, the R374.64 increment in July has effectively lost R119.00 (31.8%) due to the new power rate, reducing a 9.6% NMW increment to 6.6%. For cities and municipalities where the rate increases were greater, this would have been significantly worse.
“Annual electricity tariff hikes continue to be an extraordinary threat to annual NMW increases – this year, the Eskom tariff hike has eroded nearly a third off the annual NMW increase.