Whether you agree with how wages are divided up, with CEOs earning unlimited millions of rands every year and low level workers earning too little to support Maslow’s most basic needs, we surely must be able to acknowledge as a nation that South Africa is in a dire place and that it needs serious help, and fast. While working on a research project recently, I had the opportunity of looking some cold, hard facts in the eye, and even for someone who works in this space daily, the facts are chilling.
Since we are talking about inequality in South Africa it is important to point out that this is a country with a population of approximately 60 million people, of which over 90% are black people (African, Indian and Coloured) as defined in law. The formal economy employs approximately 16 million people and generates R8.7 trillion GDP, while the informal economy is estimated to generate R160 billion of GDP and employs a further 2.1 million people. The informal economy is mostly made up of small and micro businesses, many of which are survivalist only and exist due to the lack of jobs in the formal economy. The official unemployment rate is 26,6%, although this increases up to 32% depending on how unemployment is considered and defined (population and youth). Approximately 65% (or 39 million people) live in developed towns and cities, 11% of which are in informal settlements, while the remaining 21 million people (35%) live in rural areas. South Africa is a large country with a relatively low population density in widely spread out rural areas (42.4 people per square kilometre based on the 2011 census, placing it 170 out of 246 countries).
The majority of South Africans live in varying levels of poverty, depending on how this is defined. 16.9 million people receive and depend on social grants, which is almost the same number of people employed across both the formal and informal economies. The inequality in South Africa is not likely to decrease substantially, considering that current statistics indicate the following:
- Only about half of children enrolling in junior school progress as far as grade 12 (matric)
- Only 70% of matriculants pass successfully (note: these stats are not specific to 2016)
- Of those students that obtain matric exemption, only 68% progress to university
- Of those students that enroll in university, less than half pass their degrees successfully.
South Africa’s schooling system on maths and sciences is ranked 140 out of 140 countries.
In addition to the above, for those young people who are successful in becoming employed, there are significant further financial pressures which these individuals face. South Africa is characterised with high levels of debt amongst its citizens, even amongst the middle class and wealthier citizens (the majority of credit active consumers owe up to 75% of their net salaries to creditors). As a direct result of the apartheid policies, most South Africans have not had the benefit of building generational wealth, at its most basic level through home and land ownership, and most black people who have jobs are burdened with family members both young and old that depend on them for support. On average, black employees are supporting an average of 3.2 people, compared with white employees who are supporting only 1.4 people. The average annual household income for black households is less than $7000 a year, and only 6% of South Africans save enough for retirement. National savings is 15.5% of GDP.
What is more challenging than poverty, however, are the levels of inequality in South Africa that exist within the country. While a black middle class has been established over the last 20 years, mostly through the implementation of the B-BBEE policies, the black middle class is estimated at only 4.2 million people and this is relatively small compared with the whole. The Gini coefficient, which is a measurement of the income distribution of a country’s residents, and is based on residents’ net income, helps define the gap between the rich and the poor, with 0 representing perfect equality and 1 representing perfect inequality. South Africa’s Gini coefficient is one of the highest in the world at 0.7, with the top 10% of the population accounting for 58% of the country’s income, while the bottom 50% accounts for less than 8%. The gini coefficient amongst white South Africans has in fact reduced over time, but increased across black South African groupings.
These facts considered together paint a picture of a society where a handful of wealthy individuals have access to investment opportunities and the ability to generate and grow wealth, while the vast majority of South Africans are caught in poverty cycles which remain stubbornly difficult to break. Without a quality education, people are unable to develop productive skills and obtain gainful employment, allowing them to become productive members of society. For the minority of black people who form part of the black middle class, many are indebted, do not save enough for retirement and are supporting many more dependents than their white counterparts. This places strain on their capacity for investing, constrains their ability to deliberately invest for the longer term and drives the shorter term need for accessing cash when it becomes available, to relieve debt or deal with crises such as family funerals.
While part of the South African government’s mandate is to develop black industrialists, it is critical that this is not done at the expense of society as a whole. If inequality is allowed to continue to grow, and investment solutions are not encouraged for every day working and middle-class black people, including rural communities whose local resources are utilised by profit-making companies operating in the area, South Africa is likely to face a serious socio-economic crisis beyond anything experienced to date.
One of the ways to do this is to internalise that if we want to see South Africa changed, we need to as individuals, and collectively, consider that:
- Irrespective of government, its laws and policies and its actions, we have 16 million people who are part of the formal economy
- Change is created by individuals; these individuals may be individuals in positions of power, or they may be large groups of individuals with collective power through active citizenship
- Large scale, systemic change is created by the actions of millions of individuals willing to act
- Decreasing inequality in South Africa may mean sacrifice, eating out less, buying a less fancy car, saving electricity or consuming less water because it is a scarce resource that needs to be shared amongst 60 million people and not just a resource which you can keep consuming because you can afford the bill
- Creating a more equal society doesn’t always require money. People of all ages, genders, and races, across LSM levels can contribute their time and skills to society around them
- Creating a more equal society requires individuals to acknowledge that they are not entitled to anything, no matter how hard they work or how much money they have
If we aren’t prepared to do some of the things above to change the circumstances that contribute to the inequality in South Africa, then we must bear the collective responsibility for our actions, not blame the state of our country on the government, on voters, on minimum wage earners, on people living on social grants or on fees-must-fall fighters. None of us has the power to change how someone else thinks or acts; we can only control our own thoughts and actions. It is time we as individuals act to create the society we want to live in. Teach someone to read. Help tutor maths or science. Encourage someone with a talent for sports, or art. Volunteer with programmes that create impact. Mentor a young student or a young graduate. Think about where you spend and invest your money. Buy local. Support small businesses rather than big chains. Start a business aimed at solving complex societal problems.
Imagine the change we could create with even only a small percentage of 60 million people working together towards common goals.