UNITED NATIONS NATIONS UNIES

OFFICE FOR THE COORDINATION BUREAU DE LA COORDINATION

OF HUMANITARIAN AFFAIRS DES AFFAIRES HUMANITAIRES

Humanitarian Risk Analysis No. 4

Federal Republic of Yugoslavia

1 October, 1999

OCHA Belgrade

OCHA Belgrade issues a periodic "Humanitarian Risk Analysis", which provides an overall and impartial evaluation of the impact of the economic crisis, sanctions and recent bombing on the vulnerable sectors of the population in the Federal Republic of Yugoslavia (FRY).

  1. INTRODUCTION

This HRA considers two inter-related subjects:

By way of introduction, we note that the Serbian Red Cross recently announced that some 3 million people in Serbia (these figures do not include Montenegro) are in need of humanitarian assistance. This number was arrived at in a practical way. 190 local Red Cross offices across Serbia have received personal applications, or company applications for their workers, for humanitarian assistance. On the basis of these applications and the known number of old caseload refugees, IDPs and previously reported social cases, the Serbian Red Cross arrived at a figure of 3 million people in need of assistance. International assistance already goes to over 912,000 of these individuals, according to UN and other sources.

One indicator of change in household vulnerability can be found by tracking the usage of Yugoslav Red Cross soup kitchens. In April of this year the soup kitchens handled a caseload of 18,000 beneficiaries. At that time the Red Cross requested assistance in increasing capacity to serve a future caseload of 100,000. By 1 September the kitchens had achieved this new level of output and were serving 100,000 individuals daily. Plans are being made to expand the program a second time.

This HRA attempts to explore the issues raised by figures of this scale: what is the character of poverty in FRY, and what are the trends in household vulnerability? OCHA does not have clear answers to these questions. But this HRA attempts to shed light on them.

  1. POVERTY IN FRY

OCHA has contracted a private market research firm to analyze statistics provided by the Federal Statistical Office (FSO) as well as to conduct random-sample surveys throughout the country focusing on questions of household income, expenditures, and other indicators of quality of life.

Given the high—but difficult to quantify—levels of household earnings that come from gray market activities, establishing an objective standard for the poverty level is not possible. Instead, a number of different measures stand out as being indicative of the extent and growth of poverty within the current period. Three of these measures have been selected and explained below because they present three distinct perspectives.

(i) Income as a measure of Poverty:

The chart above shows average monthly per capita incomes in Serbia as reported between January 1998 and September 1999. This data was collected through monthly surveys (except during the April – August 1999 period) conducted in 1300 households and includes all income reported by interviewees regardless of source (regular income, gray market income, withdrawal from savings, etc.). Those figures are represented in the chart in their equivalent Deutschmark value. The downward trend in incomes is obvious, with 62.7 percent now bringing in 100 DM or less per month, compared to 32.7 percent in January 1998. While the high percentage of individuals who did not respond (around 20 percent) leaves much room for open-ended analysis, the trend over time is nonetheless quite clear.

  1. Poverty Level as defined by per capita ability to purchase optimal food basket:

This chart shows the average per capita earnings, in Dinars, set against the average annual purchase price of an optimal food basket*, as determined by the Federal Statistical Office. Those households with a per capita income insufficient to purchase the food basket, per capita, are shown as being beneath the level of poverty on the chart. Again the trend is clear, from a pre-war poverty level of 14 percent to a high of 39 percent during the 1993 period of hyper-inflation. Statistics from the first half of 1999 indicate that economic hardship is again reaching these same high levels. One coping strategy identified in this survey was the fact that poor families simply do not purchase the optimal food basket, which consists of meat, fruit, fresh vegetables, etc. Poor families cut many of these items and maintain their calorie intake by eating a diet high in carbohydrates such as bread and potatoes.

*This optimal food basket has no relation to the OCHA shopping basket (page 6) which is used to chart fortnightly price changes.

 

(iii) Perceptions of Poverty:

In a random-sample survey conducted this month (September 99) families were asked if their total family receipts were sufficient to cover their basic needs. 74.8 percent responded in the negative, and of that group 67.5 percent said they covered their additional expenses by spending savings. The other 32.5 percent of that group did not spend savings because, one assumes, they had no savings to spend. Of interest is the fact that of those families who found their incomes insufficient, 30.1 percent stated that they needed an overall income increase of 50-100 percent to meet basic needs; 26.9 believe they need an increase of 101 – 200 percent; and 28.7 percent stated that they need an increase of over 200 percent of their current income just to meet basic needs. It is worthwhile noting that these statistics represent perceptions of poverty in that they are responses to general questions with no supporting evidence: there were no follow-up questions for these families regarding actual expenditures and receipts. However, this area of research continues.

Share of households forced to spend their savings or sell parts of their assets recently, according to whether they perceive their receipts are sufficient to satisfy their basic needs

   

Spending savings...

Total

   

Yes

No

 

Are receipts enough?

"Yes"

12.2%

87.8%

100.0%

"No"

67.5%

32.5%

100.0%

All

54.8%

45.2%

100.0%

Perceived level of deficient income among those households

which found their receipts to be insufficient

 

Percent

up to 50% of total receipts

14.4

50-100% of total receipts

30.1

101-200% of total receipts

26.9

over 200% of total receipts

28.7

(iv) Summary:

As noted above, these indicators of poverty can lead to quite divergent conclusions about the total number of impoverished individuals in FRY. If one takes the population of FRY to be 8.5 million (Serbia + Montenegro + 200,000 recent IDPs – Kosovo), then those individuals living in households with a monthly per capita income of less than 100 DEM would come to 5.4 million (8.5 million x 0.63). If poverty is defined as one’s ability to purchase an optimal food basket, then those below the poverty level come to 2.8 million (8.5 million x 0.33). And if perceptions have relevance as a measure of poverty, then 6.4 million individuals are impoverished (8.5 million x 0.75).

If data on income, as measured in hard currency, were the only indicator of poverty, then one could only conclude that much of the population of FRY cannot survive under the conditions that have been highlighted by OCHA in this publication. Clearly, other factors have an overwhelming impact on basic survival in FRY, most notably gray market income and other coping mechanisms. During the past month OCHA has reoriented and refined its research tools and future editions of the HRA will focus on identifying and quantifying these coping mechanisms.

In the meantime, two final thoughts on poverty are warranted here. First, while statistics collected through surveys cannot tell the full story about poverty in FRY, statistical trends are consistent and show a clear slide into deeper poverty for much of the population. Second, the greater worry is that buffers which prevent a critical slide from poverty into dire humanitarian need may, after 10 years of continued hardship, no longer exist. Examples of these buffers include State social welfare payments, pensions, and personal savings. It is this critical downward slide that must be identified and charted so that international humanitarian actors can be ready to assist as necessary.

  1. TRENDS IN HOUSEHOLD VULNERABILITY IN RECENT WEEKS

Against this background of general levels of poverty, there is evidence that the purchasing power of households in FRY continues to be threatened week by week:

 

OCHA’S SHOPPING BASKET – FAMILY OF 4 IN BELGRADE

  Qty/

month

Total Cost/

Month

(DIN)

Aug. 10

Total Cost/

Month

(DIN)

Aug. 27

Total Cost/

Month

(DIN)

Sept. 10

Total Cost/

Month

(DIN)

Sept. 24

1. State-Controlled Basic Food

- Bread

- Milk

- Meat (chicken)

- Flour

- Sugar

- Oil

30

30 lit

16 kg

8 kg

4 kg

4 lit

901.8

90

111

576

46.4

32.4

46

901.8

90

111

576

46.4

32.4

46

910.8

90

120*

576*

46.4

32.4*

46*

910.8

90

120*

576*

46.4

32.4*

46*

2. Free market Basic Food

- Potatoes

- Onions

- Beans (dry)

- Seasonal Vegetables

- Seasonal Fruits

- Eggs

8 kg

4 kg

1 kg

28 kg

20 kg

40

494

40

20

30

196

140

68

494

40

20

30

196

140

68

775

56

28

35

336

240

80

775

56

28

35

336

240

80

3. Personal Hygiene

- Soap

- Toothpaste

- Shampoo

- Sanitary napkins

4

2

1 bot.

1 pack

122

32

40

25

25

122

32

40

25

25

136

36

50

25

25

136

36

50

25

25

4. Household Hygiene

- Detergent (Clothing)

- Detergent (Dishes)

- Cleaning agents (Household)

- Toilet paper

3 kg

1 bot

1 bot

1 pack

145

75

25

20

25

135

68*

22*

20

25

168

88

25

25

30

168

88

25

25

30

TOTAL COST  

1662.8

1652.8

1989.8

1989.8

Percent Change    

- 6%

+ 20%

0%

* Note that these items are widely unavailable at these prices. The impact of the private and gray market prices on the overall food basket cost is explained, above.