Launch of The Report of the 2008-09 Household Income and Expenditure - - PowerPoint PPT Presentation

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Launch of The Report of the 2008-09 Household Income and Expenditure Survey A few key findings

Professor Wadan Narsey School of Economics (FBE) The University of the South Pacific (currently on leave at Kagoshima University)

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A presentation from

Kagoshima University Research Center for Pacific Islands Kagoshima University Japan

with thanks to the Director KURCPI (Professor Shinichi Noda), Professor Kuwahara and support staff (Ms Kusumoto) for the use of the KURCPI facilities for this recording.

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To launch .

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Welcome

Chief guests Mr Timoci Bainimarama (Government Statistician) Ms Judith Robinson, Ms Sarah Goulding, Margaret Logavatu (AusAID) University colleagues, students, ladies and gentlemen Thank you for attending this launch of the 2008-09 HIES.

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Presentation: a few key results and policy implications

Acknowledgements Value of the 2008-09 HIES: first time comparisons possible (with 2002-03) Average Household Incomes in Fiji (area, region, ethnicity) Food security (home consumption, main dietary items, junk food, narcotics) Expenditure components: interesting items with policy implications. health education Report has others bits and pieces

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Acknowledgements

FIBoS Household Survey Unit processed and edited the data.

• Mr Epeli Waqavonovono (Chief Statistician)
• Mr Toga Raikoti (Principal Statistician)
• Mr Serevi Baledrokadroka (Principal Statistician)
• all the support staff at HQ and in regional offices.

AusAID for funding the data analysis and writing of report Kagoshima University Research Center for Pacific Islands for providing a peaceful environment to complete the writing of the Report. USP for the sabbatical leave, part of which I have used to complete the report. FBE (Professor Biman Prasad) and School of Economics (Dr Sunil Kumar and Ms Bhavna Ram) for organizing the launch of this Report.

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Importance of this 2008-09 HIES

• 1. From Bureau’s point of view: two main objectives
• to rebase CPI weights and assist with national accounts
• to assist policy makers with key stats on incomes and expenditures

at the national level, throughout Fiji

• 2. These HIES are genuine representative national sample, well administered

survey; with data generally superior to that derived from any academic study.

• 3. Changes in household incomes and expenditures:
• important base indicators of standards of living (MDGs)
• changing patterns of food consumption: food security crucial
• “new expenditures” like mobile phones

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First: macro picture: Fiji’s GDP (constant prices) (Index Numbers)

GDP: Total Income produced domestically increased to 2006; followed by decrease thereafter (collapse of the sugar industry, collapse of loans to agriculture) But 2008-09 level still better off in aggregate than 2002-03.

GDP (Constant Prices) (Index Numbers) (2002=100) 100 105 110

2002 2003 2004 2005 2006 2007 2008 2009

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Gross Domestic Product per capita (constant prices) (Index Numbers)

With growing population, decline in GDP per capita more severe after 2006. By 2008-09, still slightly above the levels of 2002-03.

GDP per capita (Constant Prices) (Index Numbers) 100 105 110 2002 2003 2004 2005 2006 2007 2008 2009

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GDP does not include Foreign Remittances

Remittances have been very large: $300 million in 2006, more than sugar earnings. Remittances rose in real terms to 2006; declined to 2007 and 2008, before rising again in

• 2009. i.e. strongly counter-balanced the impact of declining GDP per capita.

Gross National Income includes remittances: look at GNP per capita.

Remittances ($million) (2002 prices)

100 200 300 400

2002 2003 2004 2005 2006 2007 2008 2009

$ million

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Gross National Income pc (current international $) (recent WB data)

Remittance money kept pushing GNI pc up till 2008 Then clear decline thereafter till 2010. Will see below: remittances (foreign and local) have saved Fiji households./

Gross National Income pc (current international dollars) Index Numbers: 2002 = 100

100 105 110 115 120 125 2002 2003 2004 2005 2006 2007 2008 2009 2010

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Total Household Incomes: 20% real increase in aggregate, But...

Driven by real increase of 44% in urban households total income.

• 10% decline in total rural HH incomes

Rural share (bottom row) declined by 25% from 44% to only 33%.:

Estimated Total Household Income ($m) Area 2002-03 2008-09 % Ch. Real % Ch. Rural 884 1004 14

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Urban 1115 2044 83 44 All 1998 3048 53 20 % Rural 44 33

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Average Household Incomes? small rise of 7% for Fiji (in real terms: i.e. adjusting for CPI inflation of 27%)

While urban households average income improved (by +19%) There was a real decline of -13% in Rural areas (purple shading) The Rural: Urban gap (green) in Av.HH incomes widened further from -31% to -50%: i.e. must expect rural:urban drift to continue and worsening of service provision in urban areas for water, sewerage, education, health and environment.

Policy implication: MUST prioritize rural development

Average Household Income ($) 2002 2008 % ChangeReal % Ch. Rural 10559 11608 10

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Urban 15267 23036 51 19 All 12753 17394 36 7 Rural Gap

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Average Household Incomes (ethnicity): political issue for decades

Fijian and Indo-Fijian Av.HH Income changed by same 3% in real terms Others increased by 41%. Fijian:Indo-Fijian margin remained the same at +9%. But for majority of households in Fiji: no ethnic divide between the two major races.

Average Household Income (ethnicity) Ethnicity 2002 2008 % Ch. R % Ch Fijian 12972 16994 31 3 Indo-F 11902 15537 31 3 Other 19105 34197 79 41 FIJI 12753 17394 36 7 %(F-I)/I 9 9

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Ethnic shares of Total HH Income: political implications?

Usual focus is on relativities between Fijians and Indo-Fijians: Indo-Fijian share has declined by -16% to just 36% But only small 4% increase in Fijian share to 53% (still majority of total Inc.) Largest increase of 72% has been to Others, who have received the bulk of the share lost by Indo-Fijians, rising to 11% of Total HH Income. Overall shares of income similar to shares of population. Ethnic Shares of Total HH Income Ethnicity 2002 2008 % Ch. Fijian 51 53 4 Indo-F 43 36

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Other 7 11 72 FIJI 100 100

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Ethnic Poverty Result (from Preliminary Report)

Both major ethnic groups are equally poor. According to both the 2002-03 HIES and the 2008-09 HIES Policy implication of these four slides: eliminate ethnic biases for national sharing of resources and poverty alleviation

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But note: Indo-Fijian households are smaller than Fijian

Because Fijian households larger than Indo-Fijian (Fijian couples have more children) by more than 20% Indo-Fijian households are still decreasing in size (-9%) faster than Fijians (- 5%) The size gap has increased from 21% to 27% (green) Which means that Income per Adult Equivalent for Indo-Fijians is higher.

• Av. Household Size

Ethnicity 2002 2008 % Ch. Fijian 5.4 5.1

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Indo-F 4.4 4.0

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FIJI 4.9 4.7

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%(F-I)/I 21 27

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Hence living standards of Indo-Fijian households better than Fijian

HH Income per Adult Equivalent is good indicator of standard of living, because it adjusts total household income for household size Fijian households have lower HH Income per Adult Equivalent than Indo-Fijian households and the gap is growing from -5% to -8%. This also affects expenditure on education, health, durable goods, mobiles etc Policy: Put “family planning” back on the agenda for indigenous Fijians. HH Income per Adult Equivalent Ethnicity 2002 2008 % Ch. R % Ch Fijian 2958 3995 35 6 Indo-F 3108 4341 40 10 Other 4628 8747 89 49 FIJI 3094 4389 42 12 %(F-I)/I

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Worrying Changes in Income Sources (2002-03 to 2008-09)

Households saved by Remittances, Gifts and Other Incomes.

Incomes from Income Sources ($m) Data 2002 2008 % Ch. R % Ch. Wages Permanent 851 1344 58 24 Wages Casual 228 294 29 2 Agricultural Business 197 216 10

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Commercial Business 145 126

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Home Consumption 151 158 4

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All Remittances/Gifts 84 259 206 141 Other Income 342 652 91 50 Total Income 1998 3048 53 20

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Simplifying previous slide: Decline in “productive” sectors

“Productive” parts of the economy (Agriculture, Commerce, Subsistence) saw a large 34% decline in share of Total HH Income to a mere 16%. While Other Incomes increased by 40% from 21% to 30%. Policy issue: Must refocus national development efforts on productive sectors.

Contentious policy issue: restraint of formal (public) sector incomes (not the low casual wages) during national downturn.

Broad shares of Total HH Income Data 2002 2008 % Ch. Wages and Salaries 54 54 Ag/Commerce/Subsistence 25 16

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All other receipts 21 30 40 FIJI 100 100

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Good news for indigenous Fijian households: real 20% increase

Plus also: Increase in Agricultural Business incomes: 16% Increase in Commercial Business incomes: 22% Increase in Permanent Wages: 26% But worrying: significant decrease in Home Consumption (-14%). Indigenous Fijians: Income sources 2002 2008 % Ch. R % Ch Wages Permanent 437 700 60 26 Wages Casual 92 116 27 Agricultural Business 108 159 47 16 Commercial Business 43 66 55 22 Home Consumption 124 135 9

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Others 214 435 103 60 FIJI 1018 1611 58 25

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Bad news for Indo-Fijian households on production front

Policy area 1: Revival of sugar industry Policy area 2: Revival of investor confidence through elimination of political uncertainty removal of legal decrees on media censorship, expropriation of private property, and breaches of contract Indo-Fijian Income Sources Data 2002 2008 % Ch. R % Ch Wages Permanent 341 492 44 14 Wages Casual 126 165 31 3 Agricultural Business 84 52

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Commercial Business 95 58

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Home Consumption 22 14

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Others 183 313 71 35 FIJI 850 1094 29 1

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Interesting results for Foreign Remittances

Both 2002-03 HIES and 2008-09 HIES estimates are low: But in 2008-09, Indo-Fijian households receiving almost as much as Fijian While Others even larger (but may be result of statistical outliers) Key Policy Area: urgent need for national effort to increase remittances through trade negotiations and export of labour :

• PACER Plus, EPAs, US/Canada

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Expenditure components

Comparisons between 2002-03 and 2008-09 generally not feasible as substantial changes in definitions of major divisions. Some major items possible and are compared in the Report. However rural/urban comparisons useful for 2008-09.

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Major expenditures (2008-09): rural:urban differences

39% of Rural Expenditure is on Food, as opposed to only 20% of Urban But Urban expenditure on Housing/Utilities/Imputed rent is almost twice (23%) as rural households (14%) Urban households spend some 9% on education and health compared to 6% of rural households But rural:urban expenditure almost the same on Transport and Communications.

Main Expenditure Items Rural Urban All % Dif Food Cash 22 18 20

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Own Consumption 16 1 6

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Total Food 39 20 26

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Housing/Utilities/Imputed Rent 13 23 20 77 Transport/Communication 12 14 13 11 Education/Health 6 9 8 61 ALL 100 100 100

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Food security issues: Real Exp. pAE on Food declined in rural areas

Real Rural Exp. pAE declined by -6% (Food price inflation of 42.5%) While there appeared to be no change in urban areas. Policy research question: might this real reduced expenditure on food in rural areas be associated with increasing malnutrition in particular groups?

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Declining Importance of Home Production/Subsistence

Real decline in Home Production in dollar terms (see Table D.1.3) But significant decline as a percentage of Food in rural areas i.e. overall food self-sufficiency declined by -30%. With rural food self-sufficiency declining by -20%. Policy: critical to renew emphasis on home production of food, in both rural and urban areas

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Reduced consumption of local carbohydrates

Consumption depends on tastes, advertisements, prices (note the last column). Large declines for cassava and dalo Large nominal and real increase for flour, bread and noodles (all imported). Large nominal increase for rice (imported), with huge 98% increase in price.

• Exp. $ per Adult Equivalent per year, on Carbohydrates

2002 2008 % Ch. R % Ch. Price Adj. Cassava 52.23 64.23 23

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1.37 Dalo 37.56 37.95 1

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1.49 Potatoes 13.09 15.31 17

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1.57 Rice 40.29 70.36 75

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1.98 Flour 39.96 56.66 42 11 1.27 Bread 17.12 54.87 220 156 1.25 Noodles 9.76 17.40 78 43 1.24 Food Tot. 854.36 1176.62 38

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1.43

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Meats: decline in Fresh Fish consumption, increase in Tin Fish

Fresh fish saw a decline of -8% in real terms Large real increase of 33% for tin fish (mostly imported) (note: only 7% increase in price) Chicken (imported inputs) also saw a very large 20% increase in consumption Lamb (imported) a real decline of -15% (largely because of increase in price).

Fresh Fish pAE pa 2002 2008 % Ch. R % Ch. Fresh Fish 52.52 67.92 29

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Tin Fish 24.32 34.62 42 33 Chicken 41.11 61.95 51 20 Lamb 21.32 24.94 17

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Small summary, food expenditure on imported items increasing That on local items decreasing

Expenditure on major local items: increase of 27% (cassava, dalo, fresh fish, chicken) Expenditure on major import items: increase of 65% (rice, flour, bread, noodles, tin fish, lamb) Above items comprise more than 40% of total food expenditure Need to examine total food consumption Key Policy areas: Need innovative policy (revolution) for increasing local food consumption of local root crops and more nutritious fresh fish

• not just about increasing agricultural and fisheries production, BUT ALSO
• how change tastes
• how provide encouraging infrastructure for marketing

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Junk Food Snack Food Expenditure per child: Good news and Bad (only diary records, not Pocket Money)

The decline of -12% for sugary snacks/drinks: Good News; The increase of 33% in bongoes/twisties etc: Bad News. Policy implication: must consider * restrictions on advertisements; * restrictions on sports sponsorships associated with undesirable snacks and drinks etc.

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Junk food expenditure: problem for Indo-Fijians

Junk Food Exp. per child for Indo-Fijians is more than twice that for Fijians. Between the two HIES, the margin increased further from 125% to 208%. Why? High household disposable incomes? Impact of advertising? Policy research area: why such high Indo-Fijian consumption Policy application: Indo-Fijian focus of education campaign Snack Expenditure per child ($ pAE pa) 2002 2008 % Change Fijian 50.97 43.08

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Indo-F 114.52 132.68 16 Others 107.4 87.76

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Fiji 82.07 75.42

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%(I-F)/F 125% 208%

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Narcotics: Good News (alcohol and tobacco) and Bad News (kava)

Good: Tobacco: -15% reduction in nominal dollars, larger in real terms Good news: Alcohol: 4% increase nominally, but probably negative in real. Bad: Yaqona has gone up by 14%, now largest narcotic by spending See Report: Indo-Fijians now consuming more yaqona per adult than indigenous Fijians: excessive consumption at weddings and funerals. Per Adult Consumption pa ($) Area 2002 2008 % Ch. Alcohol 17.47 18.08 4 Tobbaco 22.89 19.54

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Yaqona 22.89 26.15 14 Total 63.25 63.78 1

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Policy Implications

Continued pressure on tobacco products: taxes, advertisements. New policies for discouraging alcohol consumption

• ban on advertisements
• ban on sports sponsorships

Research on reasons for heavier Indo-Fijian narcotics consumption Need to put increasing kava abuse on the national agenda for all groups.

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Health Expenditure: real reduction in aggregate In aggregate real reduction of -17% As Perc. of Total HH Expenditure: reduction of -30%. Only real increase being for health insurance. Policy questions: are reduced expenditures due to hardship? Is increased expenditure on health insurance due to decreasing confidence in public health services?

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Some communications expenditure

A quite extraordinary development is that some 91% of all households in Fiji have some communication medium:

• 97% of urban hh
• 86% of rural hh

While 94% of urban hh have expenditure on mobiles 72% of rural households also do.

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Communications Expenditure per hh (2008-09)

Fiji: Aver. hh expenditure on mobiles ($334) was twice that on land lines ($158) Urban still more than twice that in rural areas, both on a per hh or pc basis. Policy (given importance for education of children and adults): low rural expenditure per hh on internet (a mere $3) and in Fiji as a whole (only $32): compare with expenditure on mobiles.

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Recreation, culture and sports (2008-09): large rural gaps Large expenditures on electronic entertainment, and Pay TV Low expenditures: computers, book, sports. Policy: sports expenditure: rugby, soccer, netball: starved for funds (Huge national impact of Japanese women win World Cup in Soccer)

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Education: largest increase at tertiary levels

Tertiary expenditure rising from 57% of total private household education expenditure in 2002-03 to 63% in 2008-09. Policy: While official poloicy focuses on free primary and secondary education, just as urgent need for the poor will be at tertiary levels

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The 2008-09 HIES Report also has tables, with some interesting results on household durable goods and services

Cars and trucks Fridges Computers Videos and TV Washing machines Brush cutters Outboard motors Phones (land and mobiles) Cooking and lighting methods Water sources Toilet types BUT the 2007 Census will have more accurate data on these than the HIES.

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The earlier Preliminary Report on Poverty and Incomes

Preliminary Report on Poverty and Household Incomes in Fiji. FIBoS. 2010.

• published and launched last year at USP.

Had statistics on the incidence of poverty, poverty gaps (poverty alleviation resources required) and income distribution issues. This 2008-09 HIES Report is supplementary to the Preliminary Report This HIES Report updates some of the poverty statistics. But no significant changes to the results in the Preliminary Report.

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Thank you

Comments. All questions will be answered by FIBoS staff