A steady increase in the gap between the country’s top earners and the rest of the workforce highlights the persistent levels of inequality plaguing SA, according to a report released by Stats SA on Thursday.
Despite improvements in some measures, levels of inequality in SA remain stuck at some of the highest rates around the globe, according to the agency.
High inequality can threaten social cohesion and is a fault line facing President Cyril Ramaphosa’s administration, which has been battling to clean up after years of state capture, and stimulate growth and investment in the economy.
The report, “Inequality Trends in SA”, which examined conditions between 2006 and 2015, was published in partnership with the Southern Africa Labour and Development Research Unit and French development agency the Agence Française de Développement (AFD).
Labour market income — typically income from wages and salaries — is the largest contributor of income in SA. The report showed that it is one of the major drivers of inequality, contributing 72.4% towards overall income inequality in the country in 2015.
Between 2011 and 2015, the data pointed to a sharply widening earnings gap in the labour market. In 2015, the top 10% of employed adults earned 9.7 times that of the bottom 40% of workforce. This was up from a rate of 5.8 times in 2011.
Though SA employees saw almost no real growth in their earnings between 2011 and 2015, the top 1% of the country’s earners have pulled away from the rest of the workforce.
Real earnings per month for the 99th percentile of earners rose from about R75,000 in 2011 to about R100,000 in 2015. Earners in other segments of the workforce measured saw almost no real growth in wages, according to Stats SA.
Employment levels remain skewed along racial lines, according to the report. The unemployment rate among black people was about four times higher than that of whites, and rose from 28.6% in 2011 to 31% in 2017.
SA’s Gini coefficient based on per capita income has declined since 2006 from 0.72 to 0.67, according to the report. When measured based on per capita expenditure, the Gini coefficient flatlined at 0.65 between 2009 and 2015, after a small decrease from 0.67 in 2006.
The Gini coefficient is a commonly used measure of inequality and is a ratio between one and zero, in which zero shows perfect equality and one perfect inequality. The closer to one a country’s Gini coefficient is, the greater the inequality in that country.
Despite some improvements, at these levels inequality remains too high, said Stats SA officials.
“The situation is bad — parts of it are getting better — but even where it’s getting better, we are still at such a high level that SA stands out as one of the most unequal countries in the world, by most measures we look at,” said Werner Ruch, director for research and product development for poverty and inequality statistics at Stats SA.
“We see that this is still very much rooted in structural challenges left over from the legacies of apartheid and colonisation.”
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