South Africa’s inequality shocker — and what caused it
The 2022 World Inequality Report revealed that inequality in South Africa is now at its highest level since 1900 and is rapidly increasing.
The report presents the most up-to-date synthesis of international research efforts to track global inequalities.
The data and analysis presented here are based on the work of more than 100 researchers over four years.
The report reveals that in South Africa, the average national income of the adult population is €PPP12,400 (R117,260).
While the bottom 50% of South Africans earns €PPP1,300 (R12,340), the top 10% earns more than 60 times more (R780,300).
“Today, the top 10% in South Africa earn more than 65% of total national income and the bottom 50% just 5.3% of the total,” the report said.
Available estimates suggest that income inequality in South Africa has been extreme throughout the 20th and 21st centuries.
The top 10% income share oscillated between 50 and 65% in this period, whereas the bottom 50% of the population has never captured more than 5% to 10% of national income.
While democratic rights were extended to the totality of the population after the end of apartheid in 1991, extreme economic inequalities have been exacerbated.
The post-apartheid government has not implemented structural economic reforms to challenge the dual economy system.
The chart below shows the top 10% and bottom 50% income shares in South Africa between 1900 and 2021.
Economist Mike Schussler highlighted that the primary cause for South Africa’s high inequality is unemployment.
While many people, including the government, blame the pay gap in companies for inequality, this is misguided.
“The major cause of inequality is not the pay gap, but rather the low number of people earning wage income,” said Schussler.
Less than half of all working-age men in South Africa work. Part of the reason for this is skill levels—about 61% of the labour force is unskilled—and education must play a significant role in any solution.
He added that taking income away from the rich is not the solution to lower inequality. Instead, the solution is to increase the income of the poor.
Moving people from social grants to employment is the most effective—and best—way to decrease inequality in South Africa.
“We are more equal when we work, particularly when we have a formal sector job,” said Schussler.
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