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Broken down province by province, new data reveals South Africans may be free, but poverty is rocketing and 4,2m live on less than R7 a day

By unknown | Nov 15, 2007 | COMMENTS [ 0 ]

Bheki Ntshalintshali

The South African Institute of Race Relations recently confirmed what Cosatu and other critics of the government's economic policies have been saying for many years - that South Africa is a world leader in inequality.

One of the key features to come out of SAIRR's South African Survey is the persistent and growing level of income inequality, particularly among Africans, since 1996. Using the "Gini coefficient", it showed that in comparison to other countries, South Africa remains one of the most unequal nations.

The Gini coefficient is defined as a measure of statistical dispersion most prominently used as to measure of inequality of income distribution or inequality of wealth distribution. It is defined as a ratio with values between zero and 100. A low Gini coefficient indicates more equal income or wealth distribution, while a high Gini coefficient indicates more unequal distribution.

Zero corresponds to perfect equality (everyone having exactly the same income) and 100 corresponds to perfect inequality (where one person has all the income, and everyone else has zero income). The Gini coefficient requires that no one has a negative net income or wealth. South Africans have seen an increase from 60 in 1996 to 65 in 2005, the highest of the countries in the table.

Broken down by province, the data revealed that inequality was highest in provinces with large poor or rural populations, with Eastern Cape, KwaZulu-Natal, Limpopo and Mpumalanga all with Gini coefficients of 65. The situation was not much better in South Africa's richest provinces, Gauteng and Western Cape, with Gini scores of 59 and 58 respectively.

The extent of this growing income gap was exposed in the fourth Annual Mabili report on Directors and CEO Salaries for 2007.

Steve Booysen of Absa received an all-inclusive package of R17,5million, while Sean Summers of Pick 'n Pay received R10,19million a year. He sold off some of his R13,5million worth of shares in Pick 'n Pay during the year, making his total take-home package R23,69million a year.

In contrast to these astronomical salaries, the minimum wage for a worker in Absa is R50000 a year or (R4167 a month), and at Pick 'n Pay it is R30000 a year (R2500 a month). An ordinary Pick 'n Pay worker would have to work nearly eight centuries to earn what Summers did in a year!

But that person would at least have a job. The 8million South Africans who are unemployed and their families are even worse off. Despite the creation of some new jobs, unemployment remains just below 40percent, by the expanded definition which does not exclude those who have given up trying to find work.

The rate at which jobs are being created moreover, is nowhere near fast enough to cater for those entering the labour market each year, so that the effect on the percentage rate has been minimal.

The quality of jobs is also dropping, as more and more are becoming casual, temporary, insecure and low-paid. According to the Labour Force Survey, 16,7percent of all officially employed people in South Africa earn less than R500 a month, 34,3percent earn under R1000 a month and a total of 54percent of all workers earn less than R2500 a month. The workers' share in the national income has declined since 1994, while the share of profits has increased. Overall 40percent to 50percent of the population live in poverty.

It comes as no surprise therefore that, according to another recent SAIRR survey, severe poverty levels in South Africa have doubled in the last 10 years. It says that poverty increased "dramatically" between 1996 and 2005. "Using the globally-accepted measure of poverty, of people living on less than one US dollar (currently equivalent to R6,76) a day, poverty has increased in South Africa, both in absolute numbers and proportionally. In 1996, some 1,9million South Africans survived on less than one US dollar a day. This had increased to 4,2 million by 2005.''

The survey shows that Limpopo has the highest percentage of people living in poverty, followed by KwaZulu-Natal. Western Cape had the smallest percentage of its population living on less than a dollar a day - though this had fallen between 1996 and 2005.

The only other province with less than 5percent of its population living in poverty was Gauteng. Yet even there, in South Africa's economic hub, poverty also increased markedly, from 1 percent in 1996 to 3,5percent in 2005.

All this paints a picture of a society in which positive economic growth coexists with rising inequality.

While the new wealth being created by this growth enables a limited, lucky few to become richer than ever, the working poor, the unemployed and poverty- stricken communities are at best getting a few crumbs from the table, while millions are sinking deeper into poverty.

l Bheki Ntshalintshali is deputy general secretary of Cosatu


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