Economy of South Africa - Income Levels

Income Levels

South Africa is affected by extreme differences in incomes and wealth. The good level of economic economic growth in the post-apartheid period has led to a measurable decline in income poverty, but inequality has increased. The high level of overall income inequality has further accentuated: the country’s Gini coefficient increased by four percentage points, from 0.66 to 0.70, between 1993 and 2008, and income has become increasingly concentrated in the top decile. Inequality between urban and rural areas is changing: while rural poverty rates remain substantially higher than those in urban areas, urban poverty rates are rising and rural rates seem to be falling.

While between-race inequality is slowly falling, an increase in intra-race inequality is preventing the aggregate measures from declining. Despite that, between-race inequality also remains a central issue: real incomes have been rising for all groups, but many blacks in the country still live in poverty. At any poverty line, blacks are very much poorer than coloureds, who are very much poorer than Indians, who are poorer than whites.

The mean per capita income has risen from R10,741 in 1993 to R24,409 in 2008, but these figures hide large differences in household welfare, both within and across population groups: the average Black income increased from R6,018 in 1993 to R9,718 in 2008; for Coloured households, the increase was from R7,498 to R25,269; for Whites, the increase was from R29,372 to R110,195. While mean income rose about 130% from 1993 to 2008, the median income rose just 15% over the same period, from R4,444 to R5,096, indicating that the increases are being driven by a small number of very large incomes, especially for Whites.

In 2000 the average white household was earning six times more than the average black household. In 2004, 29.8% of all households had an income (at constant 2001 prices) of less than R9,600 per annum, while 10.3% of all households enjoyed an annual income (at constant 2001 prices) of more than R153,601 per annum.

One study using calculations based on National Income Dynamics Study (NIDS) data suggests that 47% of South Africans live below the poverty line: 56% of blacks live in poverty compared to 2% of whites, using an arbitrary income poverty line of R502 per capita. The United Nations Development Program's Human Development Index (HDI) ranked South Africa 110 out of 169 countries in 2010. The report notes, however, that the region's assessment has improved slowly since 1980. The HDI includes a Human Poverty Index (HPI-1), which ranked South Africa 85 out of 135 countries.

The number of South Africans living below the poverty line, identified according to Apartheid-era social categories, was calculated in one study as 56% "black", 27% "coloured", 9% "India", and 2% "white". In the past inequality in South Africa was largely defined along race lines, but it has become increasingly defined by inequality within population groups as the gap between rich and poor within each group has increased substantially.

The Organization for Economic Cooperation and Development proposals for addressing income inequality included: encouraging more saving and investment; a liberalisation of product-market regulation; easier access to credit for small businesses; greater co-ordination in wage bargaining; and measures to tackle the high level of youth unemployment. Some proposals have included wage subsidies for people being trained, a minimum wage differentiated by age, and extended periods of probation for young workers.

A 2011 study published by the University of Cape Town about the richest 10% found that nearly 40% are black, where this group had once been almost exclusively white. While only 29% of the absolute wealthiest South Africans are black, this jumps to 50% among the "entry-level" rich (defined as earning more than $4,000). Factors that were found to be common among those in the entry-level rich group include being young, entrepreneurial and having some post-secondary education.

According to one estimate, 10.4% of South Africans belonged to the "higher middle class" in 2004, defined as having a per capita income of over R40,000 (in 2000 Rand).