Little comfort in SA inequality gap study

● More than half of SA’s household spending comes from the richest 10% of its people, while the bottom 50% of the population shares less than 10% of total spending, reflecting the deep inequality that puts SA up there in the top five most unequal countries globally.

This is the finding from a new study by Statistics SA, Inequality Trends in SA, which finds, however, that the inequality gap didn’t get any worse between 2011 and 2015 and on some measures even got better — with the stats showing some narrowing of the gap between rich and poor, particularly in areas such as access to piped water, telephones and electricity.

The study shows that the national Gini co-efficient, which had fallen from a high of 0.67 in 2006, remained stable at 0.65 between 2009 and 2015. A Gini of 1 represents perfect inequality while 0 represents perfect equality.

Measured by another method called the Palma, inequality actually declined, with the richest 10% of the population spending 7.9 times what the poorest 40% spent in 2015, compared with 8.8 times in 2006.

However, inequality among black African people increased — as expected, with more black African people entering the ranks of top earners over the period while more were unemployed at the bottom end of the scale.

The study reflects how important access to higher education and skills are in determining peoples’ life chances and incomes.

The gap between the lowest and very highest earners widened alarmingly between 2001 and 2015 as people at the top end of the scale rode out a weak economy, benefiting from the premium and bonuses paid for their scarce skills, and high pay increases at the top end of the civil service.

The Treasury’s recent economic strategy paper calls for skilled immigration to SA to be made easier in the short term for individuals with tertiary qualifications, to tackle the skills constraint on economic growth.

While the lowest 50% of earners saw their earnings decline in real, inflation-adjusted terms by 15% over the period, the real earnings of the top 2% increased by 15%.

By 2015, the earnings of the top 10% were 9.7 times higher than for the bottom 40%, up from 5.8 times in 2011 — and with the economy’s weak growth and rising unemployment since 2015 the gap may have worsened since these surveys were done.

The numbers show inequality across race and gender lines is still stark in SA.

“The earnings depict the heavily racialised inequality in the South African labour market, with white South Africans earning an average R24,646 a month in 2015, more than three times as high as black Africans on average. In addition to having worse employment outcomes , black Africans also earn the lowest wages when they are employed,” says the study, which also points to the wage gap between women and men.

On the upside, the government’s propoor spending is reaching its target to some extent, with a decline in “asset inequality”, reflecting better access to services.

University of Cape Town academic Murray Leibrandt says the study, which measures inequality on multiple different dimensions, shows how inequality reflects the interaction for example between educational outcomes and labour market inequality — but also how hard it is to reduce inequality, even with improvements in some metrics.