Use it up, wear it out, make do
W Eare living in tough economic times; the prices of commodities are escalating every day. We are currently contending with the unprecedented increases in the overall cost of living and we need to find new ways to survive. The current economic climate will push a lot of people into poverty, food insecurity, while others will be pushed into overall debt overhang as the interest rates continue to rise unabated. The situation we are contending with requires unprecedented levels of frugality; we need to make changes so we can adapt to the current conditions that we are facing.
Household level
We need to learn to avoid unnecessary expenditures and rationalise our expenses so that we are able to make our Lilangeni stretch even further. It is imperative that we use up all household commodities before we can even replenish and minimise wasteful expenditures. It is said those who survive all the economic crisis that humanity has faced are those who had backyard gardens or those who could subsist. We need to minimise unnecessary spending. We need to revive family face time and other means of entertainment that are virtually cost free, requiring only the company of friends and family. We can also explore eating in rather than take outs, and we need to normalise preparing lunch boxes for our loved ones; this will minimise our expenditures on daily sustenance across all levels of the family and that way we make the value of the Lilangeni go even further. We need to improve on the culture of carpooling or ride share services so that we cut down on the costs of getting around as fuel is a major driving force to food inflation.
Private sector
If there is one thing that we have learnt from COVID-19 is that we can work from home or rather we can have flexible working conditions. We can assist employees by rethinking the hours of work and the conditions of work, focusing on deliverable-based contracts and investing in remote work capabilities and supervision acumen for remote work. This will assist employees cope with the pressures of the increasing cost of living, which will result in rigorous negotiations for wage adjustments. We also need to invest in proper wellness programmes for staff as trying economic times tend to affect staff productivity negatively. There is also a need to consider commensurate levels of salary adjustments to maintain levels of staff productivity.
Public policy
Albeit that this is a supply side problem, which limits the effect of public policy on the current economic challenges, but we need government to come up with measures that will cushion the blow and soften the blow on consumers. There needs to be a proper balance between balancing the needs of producers and the needs of consumers. Regulations on the prices of basic and controlled commodities, such as bread and electricity, need to be mindful of the ability of all players to absorb the increases. We need the revenue authority to consider increasing the range of zero Value Added Tax (VAT)-rated commodities as this will reduce the price of those commodities by a factor of the VAT. Furthermore, we need to consider cutting down on some of the levies on fuel so that we slow down the rate at which the prices of fuel are increasing. This will help reduce the pressures on the public in relation to the skyrocketing cost of living. We need to consider raising funds to strengthen our social security and cash transfer programmes as a country so that we can expand on the number of recipients for the cash transfer programmes; access to social security will soften the impact on citizens of the increasing cost of living.
Conclusion
We are facing harsh economic times fuelling increases in the cost of living. The major driving forces to the problems that we are facing are global and domestic economic policy becomes deficient or rather ineffective in dealing with supply side problems. What public policy can do in this case is help cushion the economy or rather soften the blow. Let me explain further what I mean by this; increasing the interest rates does not help a ship move from China to the rest of the world. Also, playing around with monetary and fiscal policy variables will not stop the confrontations in Russia and Ukraine. To solve the problems that are major contributors to the global economic challenges, we need supply chains to restore, or rather setup new supply chains so we can have demand and supply match yet again. We need increased oil output and the Russian oil played a pivotal role in the global supply of oil. Hence, demand side policies such as shrinking the balance sheet of the central bank and increasing interest rates only defuse the demand pressures and if excessively implemented, may push the economy into recession with high inflation or rather stagnation. We need to ensure that the population can absorb and weather the shock.