SA’s extraordinarily high levels of inequality bring a range of social ills, from slow economic growth to social and political conflict. The recently published income & expenditure survey for 2022/2023 finds that over the past decade progress in alleviating inequalities by class have stalled, though there has been some reduction in disparities by race.
According to the survey, the poorest 60% of households’ share of total consumption expenditure remained essentially unchanged from 2014 to 2022. It was 23% of total household spending in 2022, down slightly from 24% in 2014. For comparison, the share of the richest 10% alone was more than 40% of the total in 2022, up from 38% eight years before.
These shifts contrasted with the significant reduction in inequality reported from 2005 to 2014. In 2005 the poorest 60% of households accounted for just 16% of spending, and the richest for 49%.
The figures on reported income show a similar trend, but far greater inequality. They find that the poorest 60% of households got only 17% of total income in 2022, while the richest decile enjoyed 49%.
The divergence in findings for expenditure and income reflects various factors. For one thing, richer people save more, which doesn’t show up in expenditure figures. High-income households can also indulge in large one-off treats, such as big weddings and luxury tourism. Income and expenditure surveys cannot easily capture these outlays, so they may understate spending by the richest families. In addition, the findings also reflect the unreliability of many households’ reports on income, particularly by the wealthiest and poorest families.
Finally, in line with international norms the survey treats home ownership as a source of implicit income, arguing that it in effect replaces spending on rent. However, from 2014 to 2022 it reported a far quicker jump in this item than in other income sources for the poorest households, without providing an explanation.
Despite these caveats, the finding that progress towards overall income equality stalled out over the past decade seems robust. In contrast, inequality by race continued to improve from 2014 to 2022. These results reflect in part the continued decline in the share of white households in the total population, and in part more rapid growth in African households’ spending and income.
In 2005 white households comprised 13% of households but accounted for 45% of total spending. In 2014, their share in household numbers had fallen to 10%, and in spending to 35%. In 2022 they comprised only 9% of all households and captured 25% of consumption expenditure. In the same period African households’ share in total consumption spending climbed from 40% to 60%, while their share in household numbers rose from 77% to 82%.
As a result of these trends, though income disparities by race remained extremely large, they declined steadily from 2005 to 2022. On average, in 2005 white households spent six times as much as African households; in 2014 they spent five times as much; in 2022, the ratio fell to 4:1.
The lack of progress towards more equitable income distribution overall in the past decade helps to explain both slowing overall growth and deep social and political divisions. In part, inequality was reinforced by the nature of job losses during the Covid-19 pandemic. From 2000 to 2022 retrenchments largely spared professional and skilled workers, but hit informal and domestic workers particularly hard.
Ultimately, however, SA’s unusually profound inequalities derive from deeper structural factors. Overcoming them necessitates a vast expansion in programmes to expand employment and self-employment, improve education and build assets and infrastructure in working class communities.
• Makgetla is a senior researcher with Trade & Industrial Policy Strategies.
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