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Young, middle class and black

State employment drives growth of income bracket.

JOHANNESBURG – In the last eight years, South Africa’s ‘Black Diamonds’ doubled from 8% to 16% of this population segment, and their spending power to a whopping R400 billion.

This was revealed in the latest UCT Unilever Institute report entitled ‘Four Million and Rising.’ To be tagged with the term first coined by the institute in 2005, Black Diamonds must earn between R16 000 and R50 000 per month, have a tertiary qualification, a white-collar job (probably working in government) and be under the age of 44.

In 2004, 1.6 million black people were part of the middle class comprising five million people. In 2012 this number skyrocketed to 4.2 million – a 240% growth in the middle class segment.

According to the research report, the average personal disposable income of the black middle class stands at R8 191, with household income standing at R22 634.

Since 2004, disposable household income has increased by 35% for the black middle class, while white household disposable income grew by 10%, although the former is off a lower base. The spending power of the white middle class is estimated at R380 billion.

The growth of the middle class has been fuelled by access to higher education, and nearly half of those who participated in the study had some form of tertiary education. Less than 14% of black participants did not have a matric certificate. Access to credit, BEE and economic growth has also contributed to the increase of the black middle class.

According to the researchers, what makes the black middle class group unique, is that it is fuelled by the high number of individuals who are employed by the state: 40% of skilled black people work in government as opposed to 13% white skilled individuals.

Illana Meltzer, Eighty20 Consulting co-founder, said this is unlike the global trend where the private sector fuels middle income growth. The black South African middle class is also younger, compared with much older white middle class.

The participants defined middle class as having a car, being able to pay off debt, having disposable income, living in the suburbs, shopping at malls, sending children to good schools (private or ex-model C schools) , access to the internet, financial stability and having DStv.

Thabang Ramogase, co-founder of Brandswell, said that the growth of the black middle class is not a linear story, it is complex. For example, the ‘aspirational middle class’ earning between R10 000 and R16 000 per month mimics the middle class’s spending patterns.

Ramogase added that the black middle class should be understood as a heterogeneous group and not a homogenous one.

As can be seen from the map below, the vast majority of black middle class is situated in Gauteng.

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