Addressing inequality is key to progress
Spotlight
LETTA Mbulu’s famous song, Not Yet Uhuru, was a warning that we have yet to achieve our economic freedom in this country.
Although it’s been years since we began to sing her lyrics, the World Bank still identifies us as one of the most unequal societies in the world.
It is true that income inequality has increased in almost all regions of the world in recent decades, but South Africa stands out for its stark disparities – a reality we should have tackled more effectively over the past 24 years of our liberation.
How is it possible that 29% of our people are still trapped in poverty, unable to buy enough food or access basic health care?
When you consider that four-fifths of the rural population live below the poverty line, while the average business executive earns R18 million a year, we are in a crisis.
We may have attained all the relevant political freedoms, but are we really free when the top 10% of South African earners capture 66% of the national income? That same 10% also own 90% of our assets, whereas that percentage of the population in advanced countries would generally own 75%. As Joshua Nkomo said in the early years of Zimbabwe’s liberation, it is possible for a country to gain freedom but for the people not to be free.
While we squabble over whether R20 an hour is an acceptable minimum wage to be adopted in the coming months for the working class, we live with the reality that, according to Oxfam, it takes 4.5 days for the bestpaid Shoprite executive to earn what a temporary farmworker earns in their lifetime. It is instructive to compare our proposed minimum wage with that of other countries: in Canada it is R105 an hour, in Australia R169 and in India, a developing country, R31.
There is no question that we are not doing enough to close the embarrassing wealth gap in this country. What we need is deliberate and progressive state intervention to achieve the necessary changes the wealthy and ensure that fortunes are not moved beyond the reach of the national tax authorities, as evidenced in the Panama papers. Unfortunately our former presidents have presided over large-scale revenue outflows in the post-democratic period. Business will also need to embrace a transformative agenda and ensure worker participation on boards.
At the core of the matter is the fact that unemployment is a huge driver of inequality. Most of us are aware that the role of skills and labour market factors have grown in importance in explaining poverty and inequality, and we urgently need to upgrade people’s skills in tandem with job creation.
According to last month’s World Bank report on poverty in South Africa, the role of gender and race – while still important – has declined.
One of the greatest obstacles to South Africa’s real economic transformation is that macroeconomic thinking is still mired in neo-liberal orthodoxy.
Sadly, the trajectory of poverty reduction was reversed in the years 2011-2015. That was largely owing to the fact that corruption and state capture plagued our democratic institutions and state-owned enterprises, diverting significant resources away from essential projects supposed to deliver much-needed services to the people.
The fact that our sovereign ratings are on the brink of junk status is a national shame. Junk status would peg us at non-investment grade, which would severely impact on our ability to woo investors and subsequently create new jobs.
It is time for us to right the ship and put all our collective resources into ensuring that we govern for the benefit of the masses, not the elite.
In the immediate post-1994 period the world loved and respected us and we were perceived to have done all the right things. There is no reason why we can’t reclaim the moral high ground and preserve the integrity of our transition.