Identifying Opportunities to Reduce Income Disparities in South Africa Today and In the Future
Despite the end of apartheid in the early 1990s, South Africa remains racially and economically segregated. The country is beset by persistent social inequality, poverty, unemployment, a heavy burden of disease and the inequitable quality of healthcare service provision. -- Katusha de Villiers (2021)
In 2019, the World Bank recognized South Africa as the most unequal country in the world, meaning that South Africa’s economy does not equally benefit all of its citizens. – Khanyi Mlaba (2020)
Chapter One: Introduction
The epigraphs above underscore the current plight of South Africa nearly 3 decades after apartheid was formally abolished and a democratically elected government assumed power. Like many sub-Saharan nations, South Africa has experienced its share of challenges over the past 2 centuries in overcoming the lingering effects of colonialism and then a draconian apartheid regime that severely polarized the South African people in ways that have left a challenging legacy to overcome. This legacy began in 1948 when apartheid was formally adopted by the South African government as a path towards the “separate development” of the nation’s races but which placed the black majority and other non-white groups at a disadvantage to the white minority (South Africa people, 2021).
Besides international boycotts, protests by national leaders such as Nelson Mandela who spent decades opposing apartheid, with many of them spending time in prison as a result, finally compelled the white-led South African government to negotiate a peaceful transition to a democratic government with equal representation for all citizens in 1994 (South Africa people, 2021). Since that time, South Africa has faced a number of social and economic development challenges, most especially with respect to the lingering vestiges of apartheid-era inequities in income, employment opportunities, housing, education, and healthcare services. An unstable political regime marred by corruption has further exacerbated the problems facing South Africa at present (South Africa economy, 2021).
Notwithstanding these challenges, though, and unlike a number of its sub-Saharan neighbors, South Africa also possesses multiple types of valuable natural resources as well as mature supply chain networks and financial, legal, communications, energy, and transport sectors. In addition, South Africa is a financial hub for the region, boasting the largest stock exchange on the continent which is also ranked among the top 20 stock exchanges globally. Notwithstanding these numerous advantages and because its economy is inextricably connected to the international marketplace, the South African economy has suffered some serious downturns in recent years that have created an unemployment crisis that threatens the stability of the nation. Furthermore, the nation is also struggling to meet the needs of its population during the ongoing global Covid-19 pandemic where South Africa has already recorded more than 1.5 million cases to date (South Africa Covid-19, 2021). These trends directly relate to the problem of interest to this study which are described further below.
Statement of the Problem
Despite an abundance of natural resources, a modern infrastructure, and increasingly aggressive efforts by the national government and support from multiple nongovernmental organizations since apartheid ended in 1994, more than half (about 55% or 30.3 million people) of the South Africa population still lives in poverty today and another 13.8 million South Africans do not have enough to eat each day (Poverty & equity brief 2021). Moreover, current economic development indicators show that the per capita annualized consumption growth rate of the bottom 40 percent of the South African population actually suffered a 1.34% decline during the 4-year period from 2010 through 2014 (the latest statistic available from The World Bank).
In addition, although attendance at educational institutions is nearly universal in South Africa, significant percentages of South African children (up to one-third in some provinces) still lack access to early childhood development programming (Measuring the progress of development in South Africa, 2021) and literacy rates are subpar. Moreover, the situation for the poorest people in South Africa is worsening and there are few new opportunities available on the short-term horizon that can help them achieve their full employment potential and realize the complete range of human right guarantees in the South African Freedom Charter, the United Nations Declaration of Human Rights, the South African Constitution and the commitments made by the South African government most recently in February 2021 to “promote efforts to tackle issues such as poverty, exclusion, employment, gender equity and access to social well-being and justice for all” (World Day of Justice, 2021, para. 2).
In sum, the ability of the nation’s leaders to take advantage of South Africa’s cornucopia of valuable natural resources has been limited in a number of ways that have directly affected the wellbeing of its citizens. While many of these constraints can be traced to the apartheid era, it is also clear that South Africa have failed to achieve the promise of the “miracle” that occurred in 1994 when apartheid was formally abolished and democratic elections were held for the first time in the country’s history. At present, some of South Africa’s more significant economic development challenges include the following:
· South Africa\\\\\\\'s economic policy has focused on controlling inflation while empowering a broader economic base; however, the country faces structural constraints that also limit economic growth, such as skills shortages, declining global competitiveness, and frequent work stoppages due to strike action.
· The government faces growing pressure from urban constituencies to improve the delivery of basic services to low-income areas, to increase job growth, and to provide university level-education at affordable prices.
· Political infighting among South Africa’s ruling party and the volatility of the rand risks economic growth. International investors are concerned about the country’s long-term economic stability; in late 2016, most major international credit ratings agencies downgraded South Africa’s international debt to junk bond status (South Africa government, 2021, p. 5).
More troubling still, corruption has a long history in South Africa that dates to the 17th century and it remains rampant throughout the public and private sectors. Indeed, Daley (2021, p. 3) emphasizes that, “Given this history, it is not surprising that corruption was a constant feature of the apartheid period. Black people were its chief victims, since they had no rights and so no way of protecting themselves against abuse. But they were not the only ones, as politicians and officials used government power for personal gain.” Unfortunately, this same pattern has been repeated countless times since 1994, and corruption remains one of the most important challenges facing South Africa today (Daley, 2021). Taken together, South Africa has an uphill road ahead as it seeks to address the multifaceted, complex and well-entrenched problems facing the nation today, an issue that directly relates to the purpose of this study which is described below.
Purpose of the Study
Although racial segregation has not been unique to South Africa, the country’s strict apartheid laws endured far longer than most, a reality that has translated into widespread inequalities that persist to this day. In some cases, these inequalities are readily apparent but in others, post-apartheid life for many blacks in South Africa is still controlling in insidious ways by the legacy of these racial segregation laws. Indeed, as noted above, South Africa is widely regarded as being the most unequal country in the world at present, an eventuality that dismays many stakeholders today who were highly optimistic about the nation’s potential for the future. In this regard, Pooley (2018, pp. 640-641) emphasizes that, “Inequality defines the post-apartheid condition. Years after South Africa’s first democratic elections in 1994, the nation has moved to radical levels of socioeconomic polarization. Poverty, unemployment and lack of opportunity are the consuming reality for millions of South Africans.” Therefore, the purpose of this study was to identify the lingering vestiges of apartheid that are most salient in maintaining existing institutionalized racism and income disparities among South Africa’s marginalized citizenry and examining ways they can be eliminated.
Research Questions
The study was guided by the following research questions:
1. What are the primary constraints to reducing inequalities and promoting social justice, conceptualized as the equitable distribution of wealth, opportunities and privileges, in South Africa today?
2. What evidence-based initiatives have been used by the private sector in other emerging nations to improve social justice and income equality through initiatives such as job creation and skills training?
3. How can the existing human and natural resources in South Africa be leveraged to their best advantage for future economic development in ways that promote social justice and income equality?
4. How can public-private partnerships be used to their best effect in a South African context to achieve greater prosperity for all?
Importance of the study
Against the foregoing backdrop, it is clear that South African policymakers as well as the international community must develop innovative solution which are targeted at not only alleviating the suffering of these impoverish individuals but pave the road for future economic development to ensure that everyone in South Africa that wants a job that pays a living wage can get one. Likewise, additional provisions must be made for the well-being of the people of South Africa who are unable to pursue gainful employment for whatever reason. To this end, developing new employment opportunities through public and private sectors partnerships represent timely and valuable potential solutions to these challenging problems.
Chapter Two: Review of the Literature
Following the elimination of apartheid and the conduct of the first multi-racial elections in 1994, the African National Congress (ANC) headed a majority rule government that has sought to directly address the apartheid-era inequalities that continue to exist in all facets of South African society. One of the foundational documents that guided this process was the South African Freedom Charter, adopted by the ANC in 1955 to serve as a vision for a future South Africa that held equal opportunity for all. For example, according to Roberts (2020), “The Freedom Charter remained a programmatic vision for the ANC for more than 30 years, and continues to have a broad influence on the policies of government, such as those aimed at addressing past injustices and promoting equity” (p. 3).
The Freedom Charter makes it clear that there was no room left in South African society for the apartheid-era inequalities that have characterized life for the vast majority of South Africans for the past half century and more, but the aspirations codified in the Charter have not come to fruition and in some cases have even worsened over the years. The preamble to the South African Freedom Charter reads as follows:
We, the People of South Africa, declare for all our country and the world to know: that South Africa belongs to all who live in it, black and white, and that no government can justly claim authority unless it is based on the will of all the people; that our people have been robbed of their birthright to land, liberty and peace by a form of government founded on injustice and inequality; that our country will never be prosperous or free until all our people live in brotherhood, enjoying equal rights and opportunities; that only a democratic state, based on the will of all the people, can secure to all their birthright without distinction of color, race, sex or belief; And therefore, we, the people of South Africa, black and white together - equals, countrymen and brothers - adopt this Freedom Charter. And we pledge ourselves to strive together, sparing neither strength nor courage, until the democratic changes here set out have been won.
The Freedom Charter also outlines 10 specific areas in which additional progress was needed to achieve this vision for South Africa’s future as set forth in Table __ below.
Table __
South Africa’s Freedom Charter commitments
Commitment
Description
The People Shall Govern!
Every man and woman shall have the right to vote for and to stand as a candidate for all bodies which make laws;
All people shall be entitled to take part in the administration of the country;
The rights of the people shall be the same, regardless of race, color or sex;
All bodies of minority rule, advisory boards, councils and authorities shall be replaced by democratic organs of self-government.
All National Groups Shall Have Equal Rights!
There shall be equal status in the bodies of state, in the courts and in the schools for all national groups and races;
All people shall have equal right to use their own languages, and to develop their own folk culture and customs;
All national groups shall be protected by law against insults to their race and national pride;
The preaching and practice of national, race or color discrimination and contempt shall be a punishable crime;
All apartheid laws and practices shall be set aside.
The People Shall Share in the Country’s Wealth!
The national wealth of our country, the heritage of all South Africans, shall be restored to the people;
The mineral wealth beneath the soil, the banks and monopoly industry shall be transferred to the ownership of the people as a whole;
All other industry and trade shall be controlled to assist the well-being of the people;
All people shall have equal rights to trade where they choose, to manufacture and to enter all trades, crafts and professions.
The Land Shall Be Shared Among Those Who Work It!
Restrictions of land ownership on a racial basis shall be ended, and all the land redivided amongst those who work it, to banish famine and land hunger;
The state shall help the peasants with implements, seed, tractors and dams to save the soil and assist the tillers;
Freedom of movement shall be guaranteed to all who work on the land;
All shall have the right to occupy land wherever they choose;
People shall not be robbed of their cattle, and forced labor and farm prisons shall be abolished.
All Shall Be Equal Before the Law!
No one shall be imprisoned, deported or restricted without a fair trial;
No one shall be condemned by the order of any Government official;
The courts shall be representative of all the people;
Imprisonment shall be only for serious crimes against the people, and shall aim at re-education, not vengeance;
The police force and army shall be open to all on an equal basis and shall be the helpers and protectors of the people;
All laws which discriminate on grounds of race, color or belief shall be repealed.
There Shall Be Work and Security!
All who work shall be free to form trade unions, to elect their officers and to make wage agreements with their employers;
The state shall recognize the right and duty of all to work, and to draw full unemployment benefits;
Men and women of all races shall receive equal pay for equal work;
There shall be a forty-hour working week, a national minimum wage, paid annual leave, and sick leave for all workers, and maternity leave on full pay for all working mothers;
Miners, domestic workers, farm workers and civil servants shall have the same rights as all others who work;
Child labor, compound labor, the tot system and contract labor shall be abolished.
The Doors of Learning and of Culture Shall Be Opened!
The government shall discover, develop and encourage national talent for the enhancement of our cultural life;
All the cultural treasures of mankind shall be open to all, by free exchange of books, ideas and contact with other lands;
The aim of education shall be to teach the youth to love their people and their culture, to honor human brotherhood, liberty and peace;
Education shall be free, compulsory, universal and equal for all children;
Higher education and technical training shall be opened to all by means of state allowances and scholarships awarded on the basis of merit;
Adult illiteracy shall be ended by a mass state education plan;
Teachers shall have all the rights of other citizens;
The color bar in cultural life, in sport and in education shall be abolished.
There Shall Be Houses, Security and Comfort!
All people shall have the right to live where they choose, to be decently housed, and to bring up their families in comfort and security;
Unused housing space to be made available to the people;
Rent and prices shall be lowered, food plentiful and no one shall go hungry;
A preventive health scheme shall be run by the state;
Free medical care and hospitalization shall be provided for all, with special care for mothers and young children;
Slums shall be demolished, and new suburbs built where all have transport, roads, lighting, playing fields, creches and social centers;
The aged, the orphans, the disabled and the sick shall be cared for by the state;
Rest, leisure and recreation shall be the right of all;
Fenced locations and ghettoes shall be abolished, and laws which break up families shall be repealed.
There Shall be Peace and Friendship!
South Africa shall be a fully independent state, which respects the rights and sovereignty of all nations;
South Africa shall strive to maintain world peace and the settlement of all international disputes by negotiation-not war;
Peace and friendship amongst all our people shall be secured by upholding the equal rights, opportunities and status of all;
The people of the protectorates-Basutoland, Bechuanaland and Swaziland-shall be free to decide for themselves their own future;
The right of all the peoples of Africa to independence and self-government shall be recognized and shall be the basis of close co-operation.
Let all who love their people and their country now say, as we say here:
\\\\\\\'THESE FREEDOMS WE WILL FIGHT FOR, SIDE BY SIDE, THROUGHOUT OUR LIVES, UNTIL WE HAVE WON OUR LIBERTY.\\\\\\\'
Adopted at the Congress of the People, Kliptown, South Africa, on 26 June 1955 (emphases in original document).
An examination of how well South Africa has achieved these reasonable civil rights goals is provided as a “scorecard” in the data analysis chapter that follow below, but it is clear that the “chicken in every pot”-type goals outline in the Freedom Charter have not been fully realized for a majority of the nation’s population. While many people in the world during the mid-20th century simply took the fundamental civil rights outlined in the South African Freedom Charter for granted, this proclamation was historic for South Africa and served to set the stage for the eradication of apartheid and its associated laws that marginalized a majority of the country’s population as well as the actions that would be required thereafter to achieve these ambitious objectives for all South African people. As the research that follows below will clearly demonstrate, though, the people and government of South Africa have multiple and serious challenges that are arrayed against them that have constrained their ability to achieve these laudable outcomes.
Today, South Africa is classified as a middle-income nation that enjoys abundant natural resources, a mature legal and financial network as well as a comparatively modern telecommunications and transportation infrastructure (South Africa economy 2021). In addition, South Africa has the 17th largest stock exchange in the world and a population of 57 million people with a strong work ethic and sense of nationhood. Although South Africa experienced sustained economic growth during the early years of the 21st century, the global economic downturn in 2009 had a devastating effect on the country’s macroeconomic stability from which it has still not fully recovered (South Africa economy 2021).
The per capita GDP for South Africa has resembled a roller coaster on the downside of a precipitous drop in recent years as depicted in Figure __ below.
Figure 1. Per capita GDP for South Africa: 1960 to date
Source: South Africa GDP Per Capita 1960-2021 (2021) at https://www.macrotrends. net/countries/ZAF/south-africa/gdp-per-capita
Further compounding the problems facing South Africa at present has been an energy crisis that began in 2007 which has resulted in rolling blackouts for many residents of major cities which have adversely affected virtually all facets of economic life in the country. In addition, despite significant progress otherwise, there are still severe problems lingering from the nation’s apartheid era that have created limited employment opportunities for many demographic groups (South Africa economy 2020). The net result of this perfect storm of existential threats arrayed against South Africa has been an increase in the level of income inequality which defy easy solutions (Kavya and Santhakumar 2020).
The combination of a lack of ongoing investments in infrastructure and growing unemployment rates has further exacerbated South Africa’s efforts to recover to its pre-recession levels, and the country has one of the world’s highest Covid-19 infection rates at present with 1.5 million confirmed cases and a new variant of the virus that threatens to further disrupt the country’s economic stability going forward (Johns Hopkins Coronavirus Resource Center 2021). Taken together, the foregoing trends and issues make it clear that the political leaders and people of South Africa have a number of challenges ahead, making the need to determine the best path forward at this point in time to reduce income inequalities an especially timely and valuable enterprise.
There are a number of different ways available that can be used to determine the antecedents of current income inequality levels in South Africa. For example, the country currently suffers from one of the highest income inequality levels in the world as measured by the commonly used Gini index (South Africa’s inequality, 2020). For example, according to one economist, “The Gini index is a measure of the distribution of income across a population. It is often used as a gauge of economic inequality, measuring income distribution or, less commonly, wealth distribution among a population” (Gini index, 2021).
The International Monetary Fund (IMF) applied the Gini index to South Africa’s current situation and determined that income inequalities in the country have continued to remain at inordinately high levels. In fact, beginning in the 1990s when South Africa already suffered from a high inequality level due to the apartheid laws that prevented large segments of the population from securing improved employment opportunities, the Gini index for South Africa (63.0 at present) has continued to increase in severity. In this regard and as depicted in Figure 1 below, the IMF emphasizes that, “South Africa’s Gini—an index that measures inequality—has increased further in the early 2000s and has remained high ever since. Meanwhile, its peers have been able to make inroads in reducing inequality” (South Africa’s inequality, 2020, p. 2).
Figure __. Increasing inequality in South Africa: 1993-2017
Besides the dismal Gini index ratings for South Africa, the country’s income distribution levels also remain severely skewed in ways that reflect significant income inequalities. Although such skewed income distribution levels are not unique to South Africa, this measure does underscore the significant disparities between the country’s richest and poorest citizens. For instance, the top 20% of the South African population possesses more than two-thirds of the nation’s income (68%) versus a median rate of 47% for comparable emerging nations (South Africa’s inequality, 2020) as shown in Figure __ below.
In addition, the bottom 40% of the South African population holds 7% of the nation’s income versus 16% for similarly situated emerging economies) and comparable trends can be discerned from an application of other economic measures including the top 1%’s share of South Africa’s income (South Africa’s inequality, 2020).
Figure __. Wealth concentration in South Africa
As noted above, economists and social science researchers can draw on a number of different measures to assess income inequalities in a given country, including any significant regional inequities. In the case of South Africa, there are significant disparities across multiple regions of the country. For instance, slightly more than two-thirds (67.4%) of the country’s population live in urbanized areas where per capita income levels are highest, meaning rural regions suffer from severe income inequalities by comparison (South Africa people, 2021). The IMF also cites these regional disparities as evidence of the income inequalities in South Africa. In this regard, the IMF refers to Figure __ below and notes that, “Significant disparities remain across regions. Income per capita in Gauteng—the main economic province that comprises large cities like Johannesburg and Pretoria — is almost twice the levels as that found in the mostly rural provinces like Limpopo and Eastern Cape [and] being close to the economic centers increases job and income prospects” (South Africa’s inequality, 2020 p. 5).
Figure __. Regional divide in South Africa
Perhaps one of the more glaring challenges that current face policymakers in South Africa is the fundamental lack of employment opportunities for the nation’s youth. Indeed, South Africa is a comparatively young nation, with 27.94% of the population aged 0-14 years, 16.8% aged 15 to 24 years and 42.37% aged 24 to 54 years; just 6.8% of the South African population is aged 55 to 64 years and even fewer (6.09%) are aged 65 years and over as depicted in the population pyramid shown in Figure __ below.
Figure __. Population pyramid for South Africa
Source: CIA World Factbook at https://www.cia.gov/the-world-factbook/static/b494e6e2b5 1b0db23fde0acc285a4085/596f3/SF_popgraph2021.jpg
Although many nations that are suffering from declining populations due to a negative growth rate and would envy South Africa’s burgeoning youthful population, there are simply not enough jobs at present for the current cohort of young people and more aspiring workers are being added to the mix every day. In fact, South Africa ranks the third highest in the entire world in terms of its unemployment rates for youth ages 15 to 24 years with a staggering 53.4% unemployment rate (males 49.2% and females 58.8%) (South Africa people, 2021). Moreover, these unemployment rates may be underestimated and precise figures are difficult to come by so these rates may be much higher in reality. For example, according to Martins (2017), a great deal has changed in South Africa since apartheid was formally outlawed, but the promises of the past have not materialized for the vast majority of impoverished South Africans. In this regard, Martins (2017, p. 17) advises that:
A democratic government has come to power; social grants, (including those specifically for children) have been rolled out across the country and policies to generate jobs have been at the heart of state attempts to overcome poverty for more than 20 years. But the harsh reality remains. In 1993, the level of unemployment (including those who wanted work but were too discouraged to continue looking for it) for all South Africans averaged 33%, while for black African youth (aged 16–24 years) it was 65%. By 2014 the levels had not fallen. One-third of all South Africans who wanted work could not find it, while for young black people, the average was still nearly two-thirds. At the same time, while poverty has been slightly reduced, it remains widespread and the level of inequality has deepened.
It is likely extremely difficult for people in affluent countries to fully understand the impact that poverty can have on individual lifestyles, but the problem clearly transcend just money and extends to virtually all aspects of life in South Africa today. Furthermore, these troubling unemployment rates have remained stagnated or have even worsened over the past decade or so because the South African economy has not been able to create enough new jobs to accommodate existing and new entrants into the job market as shown in Figure __ below. These trends underscore the need for greater economic investments in enterprises that can generate additional low-skilled jobs for existing and new market entrants to reduce income inequalities (South Africa’s inequality, 2020).
Figure __. Income per capita index: 1993-2018
The IMF acknowledges that South Africa’s high unemployment rate represents a major challenge to reducing the per capita income inequality levels shown in Figure __ above, but the country’s unemployment rate, especially for young people, is even much higher than in other emerging economies as shown in Figure __ below.
Figure __. Youth unemployment in South Africa
It is essential to point out, however, that unemployment in South Africa is not the only source of income inequality. For example, according to Kollamparambil (2017, p. 3), “Wage inequality also contributes substantially to inequality. Thus, being employed is not sufficient to eliminate inequality as a household is likely to continue in the lower deciles of the household income distribution with an earner with unskilled employment.” These trends mean that increasing inequalities in wage earnings represents the most significant source of income inequality in South Africa at present (Kollamparambil, 2017).
Besides greater investment in private sector enterprises that can generate new low-skilled jobs for the nation’s youth, particularly in rural regions of the country where poverty levels are highest, employment opportunities can also be enhanced through improvements in the country’s educational system (South Africa’s inequality, 2021). Here again, though, there are some notable gender-related differences that are involved as well. For example, although the literacy rate for the total South African population is 87%, 87.7% of males are literate compared to 86.5% of females (South African people, 2021). In addition, improving the quality of education can also be enhanced by creating additional affordable transportation services from outlying regions to major job centers (South Africa’s inequality, 2020)
It is important to note, however, that there are a number of evidentiary indicators that also reflect income inequities in a given country, including skewed income distribution levels, regional disparities and unequal access to employment opportunities. In the case of South Africa, persistently low growth levels combined with increasing unemployment rates, especially among youth, have exacerbated income inequality levels in both rural and urbanized regions of the country (South Africa’s inequality, 2020). Nevertheless, employment opportunities, especially for young people, are even more scarce in rural regions of the country, a reality that drives many desperate job-seekers to urban areas where their chances of findings a meaningful job are only slightly better.
The stagnated employment opportunities that are available to South Africans have not only been a significant symptom of chronic inequalities, they have also adversely affected growth in other economic indicators. To its credit, the South African government has recognized the need for addressing the income inequalities that continue to hamper the country’s economic growth, including various progressive fiscal redistribution initiatives. By and large, though, the majority of the South African government’s efforts to address inequalities across the country have concentrated primarily on additional social spending, targeted transfers of government monies, and affirmative action initiatives that are intended to diversify the accumulated of wealth from a few individuals in order to promote entrepreneurship and small business growth (South Africa’s inequality, 2020).
While these initiatives are widely regarded as a good start, most observers concede that far public and private sector interventions to encourage private investments, job creation and inclusive growth are required in order to make a substantive difference today and in the future (South Arica’s inequality, 2020). Some of the recommendations that have been made by the IMF to assist South Africa in reducing its chronic income inequalities include the following:
· Creating a business environment more conducive to private investment and job creation;
· Improved governance;
· Reducing the cost of doing business;
· Making goods and services markets more open to competition;
· Allowing firms to compensate workers in line with their skills and productivity;
· Making state-owned service providers more efficient; and,
· Policies will also be needed to create opportunities to support the marginalized population through improved quality of education, health, and transportation (South Africa’s inequality, 2020, p. 19).
These recommendations are congruent with the most glaring inequalities that were identified in a report by Mlaba (2020) which summarized a recent Oxfam report identified five main reasons for South Africa’s current income inequalities as follows:
1. The average white, male CEO earns the same as 461 Black women in the bottom 10% of earners. While just over 30% of Black women in South Africa are employed (compared to 70% of white men) most of them work in low-paying care positions or occupy precarious jobs, such as call center operators or housekeepers. The average monthly income of a Black woman doing precarious work is just R2,500, which, compared to a white woman in the same position who on average earns R10,000, is very low. South African women work longer hours and are more dedicated to their employment.
2. Nine out of 10 Black households do not have medical insurance. Most Black households have to pay out of pocket for health care services, and cannot afford medical aid. Just 10% of households are headed by a Black person who can afford medical aid. This compared to 70% of white-headed households under the same circumstances.
3. Qualified Black women earn 24% less than qualified white women. Black women between the ages of 18 and 34 with a university degree have an average monthly income of R13,000, compared to a white woman under the same circumstances earning R17,000 on average. More than this, white people who have not completed their high school education and do not have a matric certificate, tend to earn more than Black people who do have a matric certificate.
4. Black women providing care work are unpaid or underpaid for their services. Black women are more likely to work in underpaid service positions such as housework, education, childcare, and community services. These positions are essential for a functioning economy even though they pay the least. Women, mainly Black women, are a lot more likely to take on care work — the work done out of love, commitment, or duty. This kind of work is not included in the calculations on the economy or its growth and very often goes unpaid. The value of women’s unpaid care work is around R352 billion annually, which is roughly 14% of South Africa’s Gross Domestic Product. Unfairly, the wealthiest 10% actually depend on this free or underpaid work as it consists of menial time-consuming work that contributes to a functioning household, examples of these would be child care and cleaning services.
5. Black women-owned properties are less valuable than white-owned properties. Although it was recently established that young Black women are becoming strong forces in the property market — with many of those in their late 20s and early 30s owning at least one property — Black female-owned properties are worth less than white-owned properties. Property valued at less than R50,000 is most likely to be owned and headed by a Black woman, whereas property valued at more than R1 million is most likely owned by a white man (Mlaba, 2020, pp. 4-6).
The foregoing aspects of South Africa’s current income inequalities make it clear that the problem is severe and the stakes are high, but there are a number of other factors that are involved in this calculus that must be taken into account in order to achieve optimal outcomes using scarce taxpayer resources and these are examined further below.
Summary of recent peer-reviewed and mainstream media articles
Given South Africa’s strategic geographic location and increasing importance as a regional financial hub (see the political map of South Africa at Figure __ below), it is little wonder that the country’s current economic predicament has been the focus of a significant amount of scholarship in recent years.
Figure __. Political map of South Africa
Source: https://www.cia.gov/the-world-factbook/static/1bbf503624fe7c093be06076dd8d696a/ 8fb37/SF-map.jpg
As will be shown in the tabular summaries set forth in Tables __ through __ below, one of the more interesting and noteworthy findings that quickly emerges from the research concerns the fact that while virtually all researchers recognize the immensity of the challenges that lie ahead, there is far less consensus about their precise origins, their persistence in adversely affecting equality, and how best to proceed beyond vague platitudes about more job creation and wealth redistribution in the future.
Table ___
Causes and implications of income inequality in South Africa
Source
Key findings
Comments
Friedman (2019)
? The standard explanation for South Africa’s failure to achieve its national objectives is familiar to anyone who has followed the country’s post- independence path. ? The democratic constitution—adopted in 1993 and refined in 1996 by the first parliament elected by universal franchise in 1994—ended the problem of racial domination that was central to pre-democratic South Africa. It created an inclusive democracy in which all enjoy equal rights, and its much-admired constitution created a framework that allows citizens and their representatives to use its levers to create a fairer, more prosperous society.
? South African politicians—particularly the country\\\\\\\'s fourth president, Jacob Zuma, who was elected in 2009 and governed until he was forced to resign in early 2018—misused the new order to enrich themselves and damage the institutions created by the constitution. And so the brave new order that the world celebrated is now forever tarnished
A quarter century after South Africa\\\\\\\'s negotiated settlement produced a democracy that won the country and its first president, Nelson Mandela, admiration around the globe, it has become trite to point out that the new order has fallen short of many of the expectations placed upon it. What is—or should be—fiercely contested is why this fall from grace has come to pass.
Schneider (2018)
? The maintenance of key apartheid-era institutions, under the guise of “market friendly policies,” undermined the prospects for long-term economic and human development in South Africa. This post-apartheid development debacle should go down in history as one of the great failures of mainstream economics and neoliberal policies.
? Breaking the cycle of uneven development in South Africa will require fundamental changes in institutions, including changes in democracy, ownership structures, and the very nature of the economic system.
? An adjusted institutional structure might reconfigure the social provisioning process in South Africa to address racial divisions and lingering inequality.
? Nelson Mandela and the African National Congress (ANC) were persuaded by mainstream economists and South African businesses to pursue neoliberal policies.
? The ANC implemented policies that made South Africa more open to international trade and financial flows along with privatization and austerity, other than a modest increase in social expenditures.
? Unfortunately, neoliberalism worsened the inequality created under apartheid and failed to stimulate significant growth and development.
Kollamparambil (2017)
? Based on a conceptual analysis, this researcher argues that in-migration into the formal sector of the receiving areas will in general reduce inequality while in-migration into the informal or unemployed sector increases inequality.
? Using individual panel data, the study further tests empirically at the district level the impact of in-migration and finds that rising urban inequality in urban areas can be attributed at least in part to rural-urban migration.
? This works through both the wage as well as employment channel. The employment channel can be said to have a stronger impact than the wage channel.
? The impact of internal migration on regional income inequality of the receiving areas has hitherto gone largely unstudied. This dearth of literature is especially surprising because income inequality and in-migration into urban centers of growth are two issues that many developing economies are faced with and tackling these issues effectively involves understanding the interactions between these two related phenomena.
? This study is therefore a first attempt to analyze the impact of internal in-migration on receiving areas and is placed in the context of South Africa.
Wilson and Vijay (2020)
? Using a bio-ecological systems theory of development, these researchers analyzed the respective roles of gender, socio-economic status (determined by resources at home and school), parental involvement and school climate in determining educational aspirations.
? Drawing on a nationally representative sample of 11,969 learners (females = 5,248; mean age = 15.7 years) from the Trends in International Mathematics and Science Study (TIMSS) and the statistical analysis technique of structural equation modelling (SEM), the authors investigated the relationships between parental involvement, school climate and learner educational aspirations.
? The results of this study showed that students from low socio-economic status (SES) homes and schools had lower educational aspirations.
? In addition, these researchers also found positive relationships between both positive and negative school climate and learner aspirations. A surprising finding was that parental involvement did not have any influence on shaping learner aspirations.
An extensive body of research exists on the background characteristics that predict learner achievement; however, in South Africa, little attention has been paid to the level of educational aspirations and the factors that shape the level of aspirations.
? The findings indicate a need to improve educational resources at schools as well as the school climate, as schools matter for learners in low-income countries.
? Furthermore, it is important to inform learners of the requirements for tertiary education, so that they develop more realistic aspirations.
Martins (2017)
? The portion of household budgets allocated to different types of goods and services provides an indication of the material standard of living of a population.
? This study discusses different definitions of poverty and compares the state of poverty according to these definitions in selected countries, followed by an analysis of South Africa\\\\\\\'s economic position in the world and a comparison of the household budgets and demographic profile of South African households that fall into different income groups in order to identify the differences between the poorest and the wealthiest households in South Africa.
? Income inequality in South Africa is further elucidated by means of the Gini coefficient.
In addition, a comparison is also made between the household budgets of the poorest households with the minimum financial living level requirements in South Africa to maintain their health and have acceptable standards of hygiene and sufficient clothing for their needs.
? Household expenditure comprises expenditure of private households on goods and services, irrespective of their durability.
? In the absence of a universally accepted method of calculating poverty, household expenditure can be used to provide an indication of inequality of wealth and serve as an indicator of poverty.
Kollamparambil (2021)
? This study found that wellbeing is concentrated among the higher end of the income distribution in both countries but that the level of wellbeing concentration is lower in Switzerland as compared to South Africa.
? The differences in the wellbeing concentration levels of the two countries are due to both the difference in the levels of income as well as the differences in the marginal utility of income in the two countries.
? The differences in the coefficients of absolute and relative income, contribute more to the differences in wellbeing concentration in the two countries than the levels of these variables. These findings indicate that the level of income and relative income is important in better understanding the impact of these variables on wellbeing inequality.
? The study sought answers to the broader question on the income-wellbeing nexus through a seldom utilized technique of concentration index to measure income related wellbeing inequality. The analysis is undertaken in the vastly differing income and income inequality contexts of Switzerland and South Africa to contrast the relationships in different scenarios over a 10-year period.
? Results indicate that South Africa\\\\\\\'s pro-rich concentration of wellbeing would decrease substantially with Swiss endowments. On the other hand, income-based concentration of wellbeing would increase in South Africa with Swiss coefficients.
Pooley (2016)
? The education sector was early on identified as key to socioeconomic empowerment for the poor and working class. Expenditure on education now amounts to nearly 20 per cent of the national budget; however, the impact of policy reforms and broad spending has been blunted by poor service delivery, inefficiency, corruption, and limited skills and capacity in government.
? An ethnographic case study of school musicking in the Ingwavuma district of KwaZulu-Natal describes some of the
strengths and challenges associated with music education in rural areas.
? Music is widely practiced as an extracurricular activity that
does not develop the skills in music literacy required for entry into tertiary education or the music industry. By contrast, students at private schools benefit from high quality education in Western music through independent examination boards. The author concludes that an egalitarian approach to music education would return the study of music to the school curriculum in revised form
? The 2012 National Curriculum Statement accords music a peripheral (and in some cases, optional) position in South Africa’s Basic Education
syllabus.
? The bifurcation of the musical arts education sector in South Africa into its public and private dimensions reproduces inequality along lines of class, race and geography. Indigenous music is thriving, but teachers lack training in music literacy and have limited resources at their disposal.
Ndimande (2016)
? This study examined the consequences of the new policies of school choice in post-apartheid South Africa and the reasons they have largely failed to achieve greater educational equality – their stated purpose.
? The author maintains that the dominant reason for this lies in the continuing inadequate resources of many poor schools and the failure to address them. Drawing on the perspectives of parents whose children attend schools in
poor neighborhoods, known as the townships, the author also argues that the resource situation in these schools directly contributes to poverty in their children’s lives.
? In addition, the issue of resources is inextricably connected to the larger neoliberal agenda of privatization and markets that has influenced social policy in post-apartheid South Africa.
? Neoliberalism in education has encouraged school choice as a way to desegregate schools and reform education. Based on these trends, though, the author concludes that instead it has continued the marginalization of Black children in township schools, and adversely affects their future by limiting their educational opportunities and their right to quality education.
? The apartheid education system spanned many decades. Apartheid was a hegemonic
government system designed to enforce racial segregation and the institutionalization of white
supremacy.
? One of the laws that reproduced resource inequalities in township schools was the Group Areas Act of 1952. This Act enforced the residential segregation plan of apartheid.
? On one hand, the majority of Black communities in rural and semi-rural areas were forcefully relocated to settlements known as the Bantustans, which were arid areas where no industrial or economic activity took place.
? On the other, Black communities in cities and suburban areas such as Sophiatown in Johannesburg and District Six in Cape Town, were also forcefully removed and relocated in areas that became known as the townships which were state-controlled
areas on the periphery of the cities.
Dowdall, Ward and Lund (2017)
? Using nationally representative data (N=11,955) from the South African National Income Dynamics Study and the South African Indices of Multiple Deprivation modelled at small-area level, this study tested
associations between neighborhood-level deprivation and depression, after controlling for individual-level covariates.
? The findings that emerged from this study supported the hypothesis that there is a positive association between living in a more deprived neighborhood and depression, even after controlling for individual-level covariates.
? This study suggests that alleviating structural poverty could reduce the burden of depression in South Africa.
? Depression contributes more to the global burden of
mental and substance abuse disorders than any other
single disorder and projections are that it will be the second leading cause of disability in the world by 2020.
? Likewise, depression contributes substantially to the burden of disease in South Africa. Little is known about how neighbor-hoods affect the mental health of the people living in them.
Ragie et al. (2020)
? This case study of 590 households from Bushbuckridge, South Africa, analyses the economic value of each of these income streams at three points: what enters the household, what is used and what is sold.
? Two important findings emerged from this study:
1) Dependence on off-farm cash incomes is far higher than previously suggested by case studies in the area and the benefits of employment accrue to those already better educated and wealthier. This suggests that shifts in off-farm opportunities will exacerbate already deep inequalities.
2) While environmental products and crops are important for direct use, they generate insignificant cash incomes from sales. This suggests a weakening of the direct links between the local ecosystem and this society, challenging traditional notions of African rurality being intrinsically land based.
Land-based income streams, which include the consumption and selling of crops, livestock and environmental products, are inherent in rural households’ livelihoods. However, the off-farm cash income stream – primarily composed of migrant labor remittances, social grants, and savings and loans – is increasing in importance in many regions.
Nyoka (2019)
? After conducting statistical analysis using Stata version 14 for Windows with a multivariate binary logistic regression modeling technique applied, this paper tested and concluded that there is a statically significant relationship between educational levels on the one?hand and income levels on the other on the probability of one having a mobile banking account in South Africa.
? From a policy perspective, this information will assist policy-makers in making more informed decisions with respect to education, and from the banking fraternity point of view it will help, them in the developments
of products that are more in line with the population’s education and income levels.
Financial inclusion has recently become an issue of concern the world over for governments, policymakers, non?governmental organizations (NGOs), and financial and non?financial institutions alike. In recent years, there has been growing theoretical and empirical works showing the strong linkages between financial development with economic growth and poverty alleviation
Ohmberger and Fichera (2020)
? Mental health and poverty are strongly interlinked. There is a gap in the literature on the effects of poverty alleviation programs on mental health. These researchers sought to fill this gap by studying the effect of an exogenous income shock generated by the Child Support Grant, South Africa\\\\\\\'s largest Unconditional Cash Transfer (UCT) program on mental health.
? Using biennial data on 10,925 individuals from the National Income Dynamics Study between 2008 and 2014, the researchers drew on the program\\\\\\\'s eligibility criteria to estimate instrumental variable Fixed Effects models.
? Based on their analysis, the researchers found that receiving the Child Support Grant improves adult mental health by 0.822 points (on a 0–30 scale), 4.1% of the sample mean. The cash transfer is substantial for poor households, as it increases household income by about 20–25%.
? These findings show that UCT programs have strong mental health benefits for the poor adult population.
The Child Support Grant (CSG) was introduced by the South African Government in 1998 as part of the governmental social assistance program. The CSG is an Unconditional Cash Transfer and South Africa\\\\\\\'s largest social cash transfer program, targeting the poor and vulnerable population. The CSG aim is to reduce poverty and vulnerability among children from poor socio-economic backgrounds by monthly grant transfers to their primary caregivers, which in most cases is the biological mother of the child. Eligibility for program participation is defined by two factors: (1) the age of the child; and (2) a means-test of the caregiver and his/her spouse\\\\\\\'s income and assets. The coverage of the CSG increased over time. Initially, only children up until the age of 7 years were targeted, but the program has been progressively extended over time to children of age up to 18 years. The income threshold was also lifted at a faster rate than price-inflation, from R2,300 (US$172.5) to R3,200 (US$240), leading to a positive real appreciation of the grant value.
Kollamparambil (2020)
? Despite increase in income inequality, South Africa has been registering decreased happiness inequality. The paper identifies the significant determinants of happiness and happiness inequality and finds that income determines happiness level as well as happiness inequality at both individual and aggregate level.
? The similarity of findings at the individual and aggregate levels indicates that the happiness–income paradox noted in literature does not seem to exist within the South African context. At the aggregate level, income inequality has significant negative and positive impact on happiness levels and happiness inequality respectively.
? While both happiness as well as income levels show increasing trends in recent years, the inequality trends differ substantially between income and happiness measures. The paper\\\\\\\'s findings reinforce the argument that happiness inequality may be a useful supplementary measure of inequality in society.
? The finding of increasing happiness levels and decreasing happiness inequality in the backdrop of increasing income inequality, is indicative that absolute effect rather than relative effect of income dominates happiness and happiness inequality at the country level in South Africa.
Ntul and Kwenda (2014)
? This study examined the role of labor unions in explaining this phenomenon among African men given that labor markets are at the core of income inequality in South Africa.
? Using cross-sectional data drawn from Labor Force Surveys for 2001–2010, these researchers identified a monotonically declining union wage premium. Further, the results indicate that unions have both compressionary and disequalizing effects on wages.
? The disequalizing effect dominates the compressionary effect, suggesting that unions have a net effect of increasing wage inequality among African men in South Africa.
? This finding implies that there is scope for unions to reduce inequality through initiatives that promote wage compression.
? One Achilles\\\\\\\' heel of post-Apartheid South Africa is the growing intra-racial income inequality, particularly among Africans.
? That an unequal dispersion of labor market earnings lies at the heart of an extraordinarily large and increasing problem of income inequality in post-Apartheid South Africa cannot be overemphasized. More recently, this has manifested through growing intra-racial income inequality, where the increase is relatively higher for Africans than other races. Hence conclusions abound that increasing intra-African earnings inequality dictates the evolution of aggregate income inequality in the country
Weimann (2019)
? Informal settlements are becoming more entrenched within some South African cities as the urban population continues to grow. Characterized by poor housing conditions and inadequate services, informal settlements are associated with an increased risk of disease and ill-health; however, little is known about how informal settlement upgrading impacts health over time.
? A systematized literature review was conducted to explore existing evidence and knowledge gaps on the association between informal settlement characteristics and health and the impact of informal settlement upgrading on health, within South Africa.
? The meta-analysis found that informal settlements pose health risks particularly to vulnerable populations such as children, the elderly, and people with suppressed immune systems, and are likely to aggravate gender-related inequalities.
? Due to the complex interaction between health and factors of the built environment, there is a need for further research utilizing a systems approach to generate evidence that investigates the interlinked factors that longitudinally influence health in the context of informal settlement upgrading in rapidly growing cities worldwide.
? These findings highlight a growing body of research investigating the ways in which complete physical, mental and social health are influenced by the physical housing structure, the psychosocial home environment and the features of the neighborhood and community in the context of informal settlements. However, there is a paucity of longitudinal research investigating the temporal impact of informal settlement upgrading or housing improvements on health outcomes of these urban residents.
Black (2016)
There is little need to explain the motivation to work on strategies to raise employment in South Africa. The country’s appalling unemployment figures are depressingly familiar and underpin high levels of poverty and social dislocation. Policies are needed which will deliberately steer the economy onto a more employment-intensive growth path. These policies need to take greater account of the pernicious and enduring legacy of apartheid.
Much work on the employment problem is focused on raising growth rates or on fixing the labor market; but important as these are, anemic growth and labor-market rigidities do not provide a complete explanation
Polis et al. (2021)
? This study examines the reasons why wealth inequalities in South Africa under the African National Congress have remained so persistently stubborn and how it is possible that the revolutionary movement, ostensibly devoted to the ideals of the Freedom Charter, has not managed to radically improve matters 25 years after the fall of apartheid.
? While some commentators have claimed that South Africa is an emerging global power, it is simultaneously the most extreme documented case of inequality, in terms of both income and wealth, in the world. South Africa is arguably the most stubborn case of inequality in contemporary history, with efforts to reduce this having largely failed. In addition, inequality has actually widened post 1994.
? Based on a series of interviews conducted with South African academics and members of civil society, the article provides some answers to this conundrum by tracing the roots of the problem to reproduction mechanisms that are deeply entrenched in the economy of South Africa, its politics and its educational system. Numerous scholars have offered a myriad of assessments of this conundrum, yet ‘no clear consensus has emerged on the causes of the post-apartheid increase in inequality.
Considering all the policy efforts to reverse this dismal trend, this is an additional puzzle and a source of embarrassment for the government for whom equality ideals laid out in the Freedom Charter remain a vital part of its political heritage and who fought the 1994 election campaign on the slogan ‘A Better Life For All’.
Ozler (2007)
? In 2000 prices, adjusted for provincial cost of living differences), at least 58%
of all South Africans and 68% of the African population were in poverty in 1995, while poverty was virtually nonexistent for whites.
? The Gini coefficient
of expenditures was 0.56, making South Africa one of the most unequal countries in the world. The country also inherited vast inequalities in education, health, and basic infrastructure, such as access to safe water, sanitation,
and housing. For instance, while only a quarter of Africans had access to piped water in their houses, Asians and whites had universal access.
? Apartheid in South Africa officially came to an end with the democratically held elections in 1994, leaving in its wake a population with vast inequalities
across racial groups.
? Many other aspects of the South African economy also pose difficult challenges. Crime is so prevalent that it leads to emigration of South African professionals of all population groups, possibly also discouraging investment and stifling growth.
? The broad unemployment rate is estimated to be 30%–40% and has been steadily increasing since 1995, making South Africa’s unemployment rate one of the highest in the world.
Oldfield and Tucker (2019
? Any analysis of South African gendered performances, identities and inequalities confront past and present experiences of and struggles with race, colonialism, post-colonial development and sexuality. These tensions shape gendered geographical work, highlighting the importance of histories of race, class, and sexuality, as well as the ways in which gender itself can be approached as an analytical category and epistemic framing in South Africa.
? These researchers focus on two avenues that have engaged scholars since the end of apartheid, namely: gender and development; and gender and geographies of sexualities. The former articulates the particular ways that the historical spatially exclusionary trajectory of the country has impacted especially on women and their ability to engage with state and national building projects post-apartheid. The latter explores how South African geographies (despite the country\\\\\\\'s progressive post-apartheid constitution with regard to LGBT rights) continue to reflect and (at times) enable spatial segregation and inequalities related to gender.
? A key strength of research in South African gender scholarship is that it complicates and challenges how policymakers might approach gender and gender-based inequalities, and the diverse ways in which gender categories and framings can be imagined, deployed and troubled in post-colonial states and cities.
Kerr, Durheim and Dixon (2017)
? Social psychologists typically conceptualize intergroup processes in terms of unequal pairs of social categories, such as an advantaged majority (e.g., ‘Whites’) and a disadvantaged minority (e.g., ‘Blacks’). This two?group paradigm may obscure the workings of intergroup power by overlooking:
(1) the unique dynamics of intergroup relations involving three or more groups, and
(2) the way some two?group relationships function as strategic alliances that derive meaning from their location within a wider relational context.
? Discursive analysis of interview accounts of the nature and origins of this violence shows how an ostensibly binary ‘xenophobic’ conflict between foreign and South African farm laborers was partially constituted through both groups’ relationship with a third party who were neither victims nor perpetrators of the actual violence, namely white farmers.
? The researchers’ analysis was based on a field study conducted in a grape?farming town in South Africa in 2009, focusing on an episode of xenophobic violence in which a Zimbabwean farm worker community was forcibly evicted from their homes by their South African neighbors.
? The researchers highlight some potential political consequences of defaulting to a two?group paradigm in intergroup conflict studies.
Nwosu and Ovenubi (2021)
? In response to the Covid-19 pandemic, the South African government has imposed a number of measures aimed at controlling the pandemic, chief being a nationwide lockdown.
? This has resulted in income loss for individuals and firms, with vulnerable populations (low earners, those in informal and precarious employment, etc.) more likely to be adversely affected through job losses and the resulting income loss.
Income loss will likely result in reduced ability to access healthcare and a nutritious diet, thus adversely affecting health outcomes.
? Given the foregoing, these researchers hypothesized that the economic dislocation caused by the coronavirus will disproportionately affect the health of the poor.
? The results of this study indicate that being African (relative to white), per capita household income and household experience of hunger significantly predicted income-related health inequalities in the Covid-19 era (contributing 130%, 46% and 9% respectively to the inequalities), while being in paid employment had a nontrivial but statistically insignificant contribution (13%) to health inequality.
? Based on these findings, the authors conclude that given the significance and magnitude of race, hunger, income and employment in determining socioeconomic inequalities in poor health, addressing racial disparities and hunger, income inequality and unemployment will likely mitigate income-related health inequalities in South Africa during the Covid-19 pandemic.
? The Covid-19 virus has resulted in an enormous dislocation of society especially in South Africa.
? Using the fifth wave of the National Income Dynamics Study (NIDS) dataset conducted in 2017 and the first wave of the NIDS-Coronavirus Rapid Mobile Survey (NIDS-CRAM) dataset conducted in May/June 2020, these researchers estimated income-related health inequalities in South Africa before and during the Covid-19 pandemic.
? Health was a dichotomized self-assessed health measure, with fair and poor health categorized as \\\\\\\"poor\\\\\\\" health, while excellent, very good and good health were categorized as \\\\\\\"better\\\\\\\" health. Household per capita income was used as the ranking variable. Concentration curves and indices were used to depict the income-related health inequalities.
? In addition, the researchers also decomposed the Covid-19 era income-related health inequality in order to ascertain the significant predictors of such inequality.
As the information presented in Table __ above clearly indicates, many of the causes of South Africa’s current status as the most unequal nation in the world predate 1994 and have since simply morphed into alternative and even mores severe ways in which these inequalities are perpetuated. Because it requires some time for timely issues to wend their way into the peer-reviewed literature and the situation on the ground in South Africa at present is highly dynamic, it was also important to determine what the mainstream media has been recently reporting about inequalities in the country and these are set forth in Table __ below.
Table __
Summary of recent mainstream media articles and reports concerning current inequalities in South Africa
Source
Key findings
Comments
Levy, Hirsch and Naidoo (2021)
? South Africa was one of the 1990s iconic cases of democratization. Yet starting in the mid-2000s, the country began to experience a disruptive collision between its strong political institutions and massive economic inequality. The collision intensified across the 2010s, resulting in economic stagnation and increasing threats to institutional integrity.
? South Africa’s experience suggests four potentially useful lessons for the many countries struggling to maintain a positive social, political, and economic trajectory in the face of high or rising inequality.
1. The trajectory of change is a knife-edge. There is potential to create virtuous circles of positive interactions among ideas, institutions, and economic growth. But there also is substantial risk that unaddressed distributional imbalances could cause a cumulative downward spiral of decline.
2. Ideas matter—a hopeful vision of change, when combined with a “good enough” responsiveness to distributional concerns, can be sufficient to launch a positive trajectory.
3. Both ideas and institutions can be shields against adversity—but only up to a point. Hopeful ideas can evoke positive agency and help mobilize people for collective action. Institutions can function as shock absorbers. However, both ideas and institutions need reinforcement, including by addressing festering imbalances in economic and political power.
4. Initiating a new cycle of renewal requires a set of ideas and actions that address in a “good enough” way the imbalances resulting from derailment.
? For the first fifteen years of democracy, South Africa enjoyed the advantages of both effective institutions and a shared willingness of stakeholders believed in the power of cooperation. This enabled the country to move beyond counterproductive conflict and pursue win-win outcomes.
? Growth began to accelerate, which created new opportunities for expanding the middle class. Increased fiscal space made it possible to broaden access to public services and to social grants, which reduced absolute poverty.
? There were, however, some stark limitations in what was achieved. Gains for the poorest did little to alter their difficult economic and social realities.
? Less than a quarter of the total population, including essentially all white South Africans, enjoyed a standard of living that was middle class or better.
? There was ample reason for the majority of South Africans to feel that, notwithstanding the promises of mutual benefit, the deck remained stacked against them. This increased the vulnerability of South Africa’s political settlement.
Winning (2021)
? South African President Cyril Ramaphosa said the governing party “could and should” have done more to prevent corruption under his predecessor Jacob Zuma, in highly anticipated testimony to a graft inquiry.
? Ramaphosa, Zuma\\\\\\\'s former deputy, was appearing in his capacity as current leader of the African National Congress (ANC), a rare case of a sitting president giving evidence on recent alleged wrongdoing by members of his own party.
? Ramaphosa added that “corrosive corruption” had hurt the ANC’s support among voters, six months before local government elections at which the party will look to improve on its worst election results since the end of apartheid.
? Opposition parties held a gathering outside the building where the inquiry was being held and participants said Ramaphosa should personally shoulder some of the blame. Ramaphosa, the ANC\\\\\\\'s deputy leader from 2012 to 2017 and deputy president from 2014 until 2018, has made the fight against graft one of his calling cards.
? After he won a closely fought battle for the ANC leadership against Zuma\\\\\\\'s ex-wife in December 2017, his allies in the party engineered Zuma\\\\\\\'s ouster, allowing him to take over as head of state in February 2018, before Zuma\\\\\\\'s second five-year term was due to end.
? The \\\\\\\"state capture\\\\\\\" inquiry is probing allegations of graft during Zuma\\\\\\\'s nine years in power, including that Zuma allowed businessmen close to him - brothers Atul, Ajay and Rajesh Gupta - to influence policy and win lucrative government contracts.
? Over several days of testimony at the inquiry, Ramaphosa is expected to be asked what he knew about allegedly corrupt practices while serving alongside Zuma and why he did not act to stop them.
? The inquiry was set up during Zuma’s final weeks in office. Zuma appeared at it briefly in 2019 but defied a summons and court order to give more evidence earlier this year. The inquiry’s lawyers are seeking Zuma’s imprisonment as a result.
“Speculation on Wealth Tax Could Contribute to Further Emigration of South Africa\\\\\\\'s Wealthy” (2021)
? South Africa has become the latest country rumored to introduce a wealth tax with a recent study by the World Inequality Lab demonstrating that the tax could generate up to 160 billion rand ($10.7 billion dollars). Similarly, experts at the University of the Witwatersrand in Johannesburg have suggested establishing a progressive wealth tax for those earning above 3.6 million rand which accounts for 354,000 high-earners in the country. While there have been no plans as yet to establish the levy, the nation has advanced on its \\\\\\\'high wealth individual taxpayer\\\\\\\' division.
? Announced during the February 2021 Budget Speech, the segment is aimed at cracking down on individuals who have not declared all their income due to \\\\\\\'complex financial agreements\\\\\\\'.
? The South African Revenue Service (SARS) has already begun identifying wealthy citizens who fall under this bracket, with many expected to receive their first letter by May 2021.
? Extensive studies have shown that South Africa\\\\\\\'s wealthy population continues to decline with roughly 1,900 millionaires leaving since the last figure recorded in 2020. According to New World Wealth\\\\\\\'s Africa report, a total of 4,200 high net-worth individuals have left the country over the last decade. With the possibility of higher taxes for the wealthy, this number is likely to grow.
? As many countries attempt to recover from the economic fallout of the pandemic, the introduction of a wealth tax has become an increasingly popular solution to tackle this.
While some experts have concluded that a wealth tax could be a short-term tool to raise revenue, many others have also highlighted the concerns attached to the taxation.
? The Caribbean has become an ideal destination for South Africans who want to remain in a similar environment without the disadvantages of their home country. The region is responsible for pioneering the Citizenship by Investment Programme – an initiative that encourages foreign investors to contribute to the economy of a nation in exchange for citizenship and the associated benefits.
Mlaba (2020)
? A new report from Oxfam South Africa details the country’s deepening inequalities by showing the income and lifestyle differences between white men and women, and Black men and women.
? In 2019, the World Bank recognized South Africa as the most unequal country in the world, meaning that South Africa’s economy does not equally benefit all of its citizens. The World Bank also reported that the richest 20% of people in South Africa control almost 70% of the resources.
It is not just the income inequality that is worrying, but also unequal access to opportunities and essential services.
Friedman (2021)
? Student poverty ensures that inequality is passed from one generation to the next. If only those who have enough are assured not only of an education but also of the material support needed to do well, the gap between the well-off and the rest will continue to grow and universities will continue to act as inequality factories.
? To insist that no one should be denied an education because they have no money is to demand concrete action against poverty and inequality. A further plus is that, if these demands are met, the money is likely to come out of university budgets and so will not mean less for schools or other public services.
If we want a more equal country, no one should be denied a higher education because they can’t afford to pay for it. Whether you go to university and achieve a degree should depend on your academic ability, not the size of your family’s bank balance. The problem of student poverty runs deep, as thousands cannot afford three meals a day, which makes it far more difficult to study.
Daley (2021)
? South Africans negotiated a democracy that replaced the parliamentary supremacy of the apartheid era with constitutional supremacy. The new constitution contains a bill of rights with the unusual inclusion of socio-economic rights alongside liberal rights. This foregrounded human dignity relative to freedom and equality, and non-racialism as a principle.
? Non-racialism is South Africa’s unique contribution to the global war against racism because it strategically unifies society beyond race in defiance of apartheid’s imposed racial differences. This necessarily involves actively combating racism.
? The global reverence for South Africa as a country that could generate “an alternative meaning of what our world might be” has dissipated. Anti-constitution pessimism and opportunism has been on the rise. A lack of meaningful redistribution of wealth has provided an opportunity for politicians to proclaim that constitutional democracy has failed. This is true for people inside as well as outside the ruling African National Congress (ANC).
? Scholars influenced by decolonial theories have criticized the constitutional order as a form of “neo-apartheid” that merely perpetuates white privilege. Non-racialism has been dismissed as “color-blindness” that hinders the correction of race-based inequalities.
? In the 1990s, a commonly held view was that South Africa had achieved a “miracle” because of its relatively peaceful political transition from apartheid to inclusive democracy in 1994.
? The “miracle” consisted of South Africans talking their way out of decades of increasingly brutal apartheid rule. They struck a deal whereby the white minority relinquished power to a racially inclusive government in a constitutional democracy.
“South Africa remains a nation of insiders and outsiders, 27 years after democracy” (2021)
? Since South Africa is highly unequal and remains divided into insiders and outsiders – those who benefit from the market economy and those who can’t – we might expect its politics to be a loud battle between those who have and those who don’t. Most commentators believe it is.
? Within the governing African National Congress (ANC), a battle rages between the “radical economic transformation forces”, who purport to champion the interests of the poor majority, and their market-friendly opponents.
Outside it, the third biggest party, the Economic Freedom Fighters (EFF), some in the ANC alliance and the advocates of black consciousness and pan-Africanism are assumed to speak for those who live in poverty.
? Over the past few years, the country has witnessed a furious debate over whether the government should be able to expropriate land without compensation. Only one group has been ignored – the millions of landless people who have the greatest stake in the outcome.
? During the first year of Covid-19, a debate raged over whether lockdown measures were needed. The official opposition, the Democratic Alliance, echoed the global right-wing by demanding that all activity be allowed. The EFF insisted that nothing should be opened. The ANC claimed to adopt a “scientific” approach in which public health and the economy’s needs were balanced.
? None of them spoke for – and to – the majority who were forced to travel on taxis which they knew might spread the virus, to earn incomes in ways which might infect them, and whose need was to find a way to feed their families without falling ill.
Insider politics shapes another conflict which divides “left” and “right” – the demand for free higher education. This is a rallying cry of the left which is denounced by opponents as a Marxist assault on the market economy. But the “left” demand boils down to insisting that the children of the corporate and professional elite should be educated at public expense. This, would, of course, mean that less money would be available to address the needs of people living in poverty.
There are many other examples which underline a reality in which no-one speaks for the outsiders except some local organizations which are ignored by the mainstream debate. It is why policies aimed at ending the exclusion of the outsiders – or at least at helping them to survive – usually fail. They are products of what insider politics think the majority need, not what the outsiders want.
“Major BEE changes are coming for some of South Africa’s biggest industries” (2021)
? While there are various drivers of local empowerment and ownership requirements in Africa, one key driver appears to be gaining ground: ‘national interest’ empowerment. There is a growing emphasis on regulating ownership in economic sectors and activities that historically have not been regulated.
? The author cites South Africa’s private security industry and the fact that the government has raised concerns that significant foreign ownership in private security companies could pose a threat to national security. South Africa – which is said to have one of the largest private security industries in the world – is gearing up to introduce local ownership requirements in the industry.
? The Private Security Industry Regulation Amendment Bill proposes that at least 51% of the ownership of both existing and new security services providers must be held by South African citizens. The bill has been pending since 2012 and has yet to be signed into law by the president.
there has also been a flurry of regulatory activity in the telecommunications and broadcasting services, with most of the changes designed to ensure local participation in new telecoms networks.
? On April 1, 2021, the Independent Communications Authority of South Africa (Icasa) announced new regulations aimed at promoting historically disadvantaged South Africans in the ICT sector. Among the changes is a requirement for licensees to comply with the mandatory equity ownership requirements, 30% equity ownership by black people and level 4 BBEEE status.
? The regulations also establish penalties of up to R5 million or 10% of the licensees annual turnover where a licensee fails to maintain the mandatory minimum requirement.
? In addition, South Africa is also revisiting its ownership requirements in broadcasting and telecommunications. Its draft regulations propose setting new broad-based black economic empowerment (B-BBEE) ownership for both those sectors.
? Until relatively recently, restrictions on foreign participation on the continent tended to be limited and focused on a few big-ticket sectors, such as aviation, logistics, mining, oil and gas and broadcasting and telecommunications. Now, restrictions are also being found in sectors that were not previously regulated.
? The variety of regulations and proposed changes can make investment decisions quite complicated, especially for investors with cross-border operations. In turn, African governments are generally aware that, amid intense domestic pressure to facilitate local citizen inclusion and participation, there is an important role for direct foreign investment to play in economic growth.
? A balance must be found to avoid the potential unintended consequence of constrained economic growth.
Daley (2021)
? Citizen anger about corruption, a constant theme in South African political debate, reacts to a very real problem. This was underlined recently by news that well-connected people had enriched themselves at the expense of efforts to contain COVID-19. What is not real is the widespread belief that corruption is both new and easy to fix.
? Reactions to corruption portray it as a product of African National Congress (ANC) rule (or majority rule for those who cling to the prejudice that black people cannot govern). In this view, it will disappear when the governing party gets serious about corruption or loses power.
? In reality, however, corruption has been a constant feature of South African political life for much of the past 350 years. It is deeply embedded and it will take a concerted effort, over years, not days, to defeat it.
The most corrupt period in the country’s history was the last few years of apartheid, when the attempt to combat the successful international sanctions campaign made corruption, protected by government secrecy, the core government strategy. This was often done with the collusion of private businesses.
“What young people have to say about race and inequality in South Africa” (2020)
? Young South Africans are being socialized into a highly racialized society and experience severe disparities. Expecting them to eradicate racism without dismantling material inequalities is a deferral of adult responsibility.
? Young people involved in the study were deeply aware of inequality. For them, reducing inequality was a priority if the country was to move towards a better future.
? It is notable that non-racialism was not a concept volunteered by any of the students as a future ideal, despite it being a constitutional principle in South Africa.
? At present there is little clarity on the meaning of non-racialism. It is equated to a multiplicity of ideas, among them mobilization against apartheid, multiracialism, multiculturalism, nation-building, and race-blindness.
? What students did want eradicated from their utopia was racial discrimination and racism. The meanings they attached to race shifted depending on the conversation, for example, race when it related to racial quotas as opposed to race when it related to culture, identity or politics.
? In addition, racial identities played an important role in these young people’s sense of self; however, some thought it is the “weirdest thing ever” that people sit in “race groups” during lunch breaks. They make sense of this by explaining that people sit with others who share their culture. Using race and culture as proxies for each other is very much part of the South African experience of racialization.
? The “commitment” to racial identities, however, was more complex than it first appeared. There was an uneasiness between accepting and feeling pride in racial identities, and not wanting them to count as measures of social value. They frequently vocalized a rejection of racial stereotypes and racism.
? Using a methodology called Dreaming Workshops, this study explored how Grade 11 students, of around 16 and 17 years old, from five different schools in the South African coastal city of Durban imagined race, racism and non-racialism in a utopian future.
? The five schools that participated in this study, three government and two private, are located in a middle-class, formerly “white” area in Durban. The schools have, on average, a diverse but mostly middle-class student body, with some students travelling from townships to attend class.
? Under apartheid townships were poorly resourced and under-serviced residential spaces designated for people racialized as black.
? Each school in the study had approximately 20 students per class. One school markets itself as girls-only, one as boys-only, the other three are open to all genders.
Jim (2021)
? During the pandemic at least 1.4 million workers lost their jobs, raising the expanded definition of unemployment rate to a staggering 42.6 per cent.
? More job losses are expected because SOEs are being actively being restructured for the benefit of private capital. Thousands of workers have suffered just so that corrupt capitalist cronies of the ANC can continue to enrich themselves, at the expense of the working class.
? At the same time, thousands of families suffered during lockdown because of non-payment of Temporary Employment Relief Scheme (TERS) caused by mismanagement and corruption of government officials.
? The governing ANC has been a dismal failure in addressing the most important challenge facing our country, namely unemployment, poverty and inequality, and this was the case before covid-19 arrived.
? The ANC has betrayed its historic mission in order to pander to the demands of neo-liberal factions of capital. Treasury is leading the attack against the working class by implementing an austerity budget with drastic cost cutting measures which are directly targeting ordinary working class families.
? The National Union of Metalworkers of South Africa is not celebrating Freedom Day on April 27, 2021 because there is very little for the working-class majority of this country to celebrate.
? In 1994 the Black and African majority participated in elections for the very first time, following decades of oppressive rule by the racist apartheid state. It was a historical moment for our people as millions queued for the very first time to make their mark, in the country’s first democratic elections. South Africans believed that by making a simple mark on the ballot sheet, centuries of colonial subjugation and suffering would be brought to an end and believed that democracy would mean equality and freedom for everyone.
? Unfortunately, history has shown how wrong they were. Twenty-seven years after the working class paid the ultimate price with their blood to end the apartheid system, the African majority remains enslaved by the bondage of poverty, unemployment and crippling inequality.
“South Africa: Broken and unequal education perpetuating poverty and inequality” (2020)
? The South African education system, characterized by crumbling infrastructure, overcrowded classrooms and relatively poor educational outcomes, is perpetuating inequality and as a result failing too many of its children, with the poor hardest hit.
? The Amnesty International report particularly highlights poor infrastructure in public schools including sanitation which has tragically resulted in the death of two children in pit latrines in recent years.
? The report also noted that in order for South Africa to comply with both its own constitutional and international human rights obligations with respect to education, major change is needed urgently.
? The right to quality education includes having a school where learners are safe to learn and have the adequate infrastructure and facilities to do so, but this is not the reality for many learners in the country.
? The result of this modern-day South Africa is that a child’s experience of education still very much depends on where they are born, how wealthy they are, and the color of their skin.
? A report by Amnesty International, “Broken and Unequal: The State of Education in South Africa” calls on the government to urgently address a number of endemic failings in the educational system in order to guarantee the right to a decent education for every child in South Africa.
? The report details how the education system continues to be dogged by stark inequalities and chronic underperformance that have deep roots in the legacy of apartheid, but which are also not being effectively tackled by the current government.
? Many schools and the communities they serve continue to live with the consequences of the political and economic decisions made during the apartheid era where people were segregated according to their skin color, with schools serving white communities properly resourced.
Mlaba (2020b)
In 2019, the World Bank determined that South Africa is the most unequal country in the world — and the recently released 2020 UN Human Development Index and Human Development Report show that the country has made little to no progress in eradicating its inequalities.
? South Africa has been ranked 114 out of 189 countries assessed in the index due to its declining standards of living and worsening income inequality.
? Since 2014, the country has dropped two ranks lower on the index, and as the Covid-19 pandemic has resulted in the loss of more than 2 million job losses, the case of South Africa’s inequality is expected to get worse.
? The country’s inequality in life expectancy and education also ranks as some of the highest deviations in the world.
? The HDR also indicates that there are a number of South African citizens living below the international poverty line. The report notes that 18.9% of the population — about 11 million South Africans — live on less than R28 ($1.90) a day, which is around R800 ($55) per month.
? South Africa is grappling with great inequalities, which contribute to extreme poverty. The United Nations’ 17 Global Goals together work towards ending extreme poverty and its systemic causes.
? These goals can only be achieved, however, if unequal countries like South Africa come to terms with serious inequalities and work towards sustainable solutions to eradicate poverty.
Taken together, South Africa is confronted with a myriad of complex, deeply rooted problems that have further exacerbated the nation’s inequalities in ways that likely could not have been foreseen with any accuracy in 1994, but which have nevertheless manifested themselves in insidious ways. Given the enormity of the problems and the high stakes that are involved for tens of millions of South Africans today, identifying, implementing and administering effective and timely strategies to directly address these issues have assumed increasing importance. Although the following list of initiatives, programs and reforms that are designed to reduce income and other inequalities in South Africa is not exhaustive, it does reflect the types of efforts that have been used in the recent past or which are currently being used for these purposes.
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Initiatives, programs and reforms designed to reduce income inequality in South Africa
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