ISSN: 1391 - 0531
Sunday, April 22, 2007
Vol. 41 - No 47
Financial Times  

Tsunami victims hit by cost of living

By Dilshani Samaraweera

Tsunami victims struggling to get their lives on track are being swept off their feet by a second deluge – an ever increasing cost of living. The latest report on tsunami income recovery by the Reconstruction And Development Agency (RADA) and the International Labour Organisation (ILO) indicates that incomes of tsunami victims have increased. More people are earning over Rs 5,000 per month and less people are living on less than Rs 2,000 per month.

The number of tsunami affected families earning over Rs 5,000 per month went from 29% in 2005, to 54% by 2006. Only 8% said they earned less than Rs 2,000 per month in 2006, compared to 26% in 2005. But while their incomes have increased, more tsunami victims are feeling poorer.

“Working individuals were asked to comment on how their income now compares to their income before the tsunami and how the length of their working hours now compares to their working hours before the tsunami. 81% of the respondents stated that the income that they earn now is less than the income that they earned before the tsunami.

This figure was 74% during the previous survey,” said Dr Cynthia Caron, an ILO consultant speaking at the launch of the fourth ILO-RADA, Needs Assessment Survey for Income Recovery report. However, many people that reported income reductions are actually earning fairly good incomes - in number terms. As much as 41% of the people that said they were earning less now than before, reported incomes of between Rs 5,000 to Rs 10,000 per month.

“So although people are earning more now, they feel they are earning less. This perception of having less money now than before is probably because costs have increased. Because although they earn more in money terms, it may still not be enough to meet their needs. In fact, overall, 88% of tsunami victims participating in the survey stated that the cost of living is more now, than it was at the time of the tsunami,” said Dr Caron.

“Our data shows that the money in their pockets has increased over the past year. But at the same time their purchasing power has declined, as subsidies were also reduced for essential items like diesel and kerosene, as well as food stuffs like sugar and rice,” explained Dr Caron. Meanwhile, the demand for higher wages is increasing.

“During the relief phase 72% of people were willing to work for less than Rs 360 per day. But now more than 86% want more than Rs 500 for a days work and 6% requested Rs 1,000 per day,” said Dr Caron. More people also claim to work less now, than they did before. “With respect to working hours, 47% of respondents stated that they are working fewer hours now than they did before the tsunami. This was 29% in 2005. Therefore if people are working less, and since there has not been a significant increase in wages, then people would be earning less,” said Dr Caron.

The ongoing conflict is another obstacle to tsunami recovery and is showing its worst impacts in Jaffna. The highest numbers of tsunami victims that are still earning less than Rs 2,000 per month (73%) are in Jaffna. Nearly half the tsunami affected households surveyed in Jaffna (45%) are now dependent on non-work incomes like remittances from abroad and government handouts. Overall, across the island, the percentage of tsunami victims relying on non-work income increased to 10% in 2006 from 3% before the tsunami.

Good news
However, the ILO maintains that tsunami recovery is showing healthy progress.
“Compared to 2005, tsunami victims have more money in their pockets. There is an overall recovery rate of 90%, which means that 90% of families have gone back to earning an income by now. 75% of the households earn their main income from the same type of work. So we can say recovery is good,” said Dr Caron.

Most tsunami victims have also gone back to their homes. Around 76% of families have returned to live on their own lands and the number of families living in transitional shelters reduced from 15% to around 4%. The government has also been able to target a majority of families with its Rs 5,000 cash grants and 87% of respondents said they had received all four instalments of the grant.

More jobs, information
Although most tsunami victims have found some kind of work, a large number of people are working less than they used to and want higher salaries. Therefore, the livelihood recovery report points out that more, better paying jobs need to be generated to speed up recovery.

The demand for information on financial support for livelihood recovery is also increasing, as by now many are trying to become fully independent again. Most people that have been resettled are now looking for information on loans and grants. Overall, 71% of tsunami victims that participated in the survey want to apply for loans. Requests for business loans had already increased to 33% in 2006, from 20% in 2005.

A majority prefer to get loans from state banks. Requested loan amounts are in the range of Rs 5,000 to Rs 4 million but 49% want interest free loans and another 49% can only pay up to 5% interest per year. However, nearly two years after the tsunami, 71% of respondents said they were still not very well informed about the goods and services available to tsunami affected families.

The latest ILO-RADA , Needs Assessment Survey for Income Recovery (NASIR IV) report surveyed tsunami victims from 10 tsunami affected districts. Due to the security situation the 11 tsunami affected district of Kilinochchi and some parts of Trincomalee and Batticaloa, were not included.

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