South Africa still very unequeal despite recent good growth

Neva Makgetla, a Congress of South African Trade Unions economist, on the latest poverty figures in SA.

In 2004 — the latest data available — 70% of all households lived on less than $2 per person per day. Half of all households spent under R800 a month, or just over half the poverty line. Still, 2004 showed a very modest improvement compared with 2002. In 2002, 75% of households lived on less than the poverty line, and 60% of households spent less than R800 a month.

The available data suggest that the current growth spurt has done virtually nothing to support greater equality in earned income. In 2005, again using Labour Force Survey data, the poorest 50% of employed people got about 12% of income. In contrast, the richest 5% enjoyed 42%. These figures remained virtually unchanged from 2002.

The data do not permit reliable estimates of income distribution between households. Obviously, given high unemployment, the figures would be more inequitable than for earned income. Still, a slight drop in unemployment and the extension of social grants may have helped.

Unemployment fell very slightly between 2002 and last year — from 42% to 38%, using the broad definition that includes everyone who wants paid work but does not have a job.

Social grants probably played a stronger role in alleviating poverty. In 2002, about 25% of households living under the poverty line subsisted mainly on social grants, with 15% surviving on remittances from relatives and the rest from earned income.

In contrast, in 2004, 30% of those living under the poverty line said social grants were their main source of income, with more or less the same share living on remittances. The percentage reporting that most of their income came from earnings had declined, underscoring the inadequacies of job creation despite growth.

While overall inequalities have remained little changed, there has been a substantial expansion in the share of black people in the high-income group. In 1996, only about one in seven of the richest 10% of income earners was African. In 2005, the African share had almost doubled to just under a third.

Most of the increase in the African share in the high-income group resulted from the promotion of Africans in the public sector, which also increased its share in the high-income group overall. The share of Africans in the public sector in the top 10% of income earners rose from a third to half, while the share of the public sector as a whole in the best-paid 10% rose from 29% to 33%.

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