1

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

$ m

illion

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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 -10

Urban 1115 2044 83 44

All 1998 3048 53 20

% Rural 44 33 -25

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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 -13

Urban 15267 23036 51 19

All 12753 17394 36 7

Rural Gap -31 -50

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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 -16

Other 7 11 72

FIJI 100 100 0

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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 -5

Indo-F 4.4 4.0 -9

FIJI 4.9 4.7 -5

%(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 -5 -8

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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 -14

Commercial Business 145 126 -14 -32

Home Consumption 151 158 4 -18

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 0

Ag/Commerce/Subsistence 25 16 -34

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 0

Agricultural Business 108 159 47 16

Commercial Business 43 66 55 22

Home Consumption 124 135 9 -14

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 -38 -51

Commercial Business 95 58 -39 -52

Home Consumption 22 14 -36 -50

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 -18

Own Consumption 16 1 6 -92

Total Food 39 20 26 -49

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 -10 1.37

Dalo 37.56 37.95 1 -32 1.49

Potatoes 13.09 15.31 17 -25 1.57

Rice 40.29 70.36 75 -12 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 -3 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 -8

Tin Fish 24.32 34.62 42 33

Chicken 41.11 61.95 51 20

Lamb 21.32 24.94 17 -15

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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 -15

Indo-F 114.52 132.68 16

Others 107.4 87.76 -18

Fiji 82.07 75.42 -8

%(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 -15

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