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Income levels for white South Africans growing the slowest

Income inequality still significant, income for black African group almost tripled in last decade.

PRETORIA – Census 2011 data released by StatsSA on Tuesday shows that the black African majority remains the worst affected by poverty and that income inequality remains a major issue.

It also shows, however, that if one looks at income growth, the group where growth has been the fastest over the last decade is in the black African category, growing at 169.12%. From an average income of R22 522 in 2001, this group now earns on average R60 613 per year.

According to the statistical release from StatsSA, if the income growth just remained on par with inflation over the ten-year period, growth should have been at 77.5% or, for this group, R39 976.

Whereas the white population of South Africa on average still earn multiples more than the black African category, their average income only grew at 88.38% over the last decade, just above the compound percentage of 77.5% to stay above inflation.

At an average of R365 134 per year, the average income for a South African in this group is still more than a R100 000 more than the closest other demographic group – Indians/Asians at R251 541 in 2011. (see table 1).

Dr Azar Jammine, chief economist at Econometrix, told Moneyweb that the rate of growth in income for the white population is a lot lower than that for the black African population.

He said what is not clear in the statistics, is that a section of the black African population has become “hugely enriched” in the last decade, and that has boosted the rate of growth in income.

“So what is hidden in the data is that there is not just growing disparity between the race groups, there is now also growing disparities within the black African group as well. If you are fortunate to have a job and education and be a beneficiary of black economic empowerment and employment equity, it is a different story,” he said.

On average, it is good news that South African households now earn more than double what they did back in 2001.

There is also a disparity in income levels depending on where you live and work, with Gauteng households earning about R156 243 a year, compared to the Eastern Cape where the average was only R64 539.

According to Mike Schüssler, economist at Economists.co.za, underlying the inequality statistics are the inequalities in education, urbanisation and employment.

“The labour force participation rate for the white demographic group is a lot higher than for the black African group. It is a situation where almost twice as many white South Africans are employed than African South Africans, which obviously has an impact on income levels,” he said.

Secondly, Schüssler said that another disparity between the two groups is that the white demographic groups have a higher educational attainment level – in quality and level of education – than the black African group.

“It is the inequality in education that is driving the inequality in income,” Schüssler told Moneyweb.

Thirdly he said, the percentage of white South Africans who live in the two richest provinces in the country, the Western Cape and Gauteng, is higher than in the other provinces of the country. “These are the two most urbanised areas and all around the world these areas have higher income.”

According to the Census, Gauteng now has 12.3m people, an increase of 33.7% from 1996 to 2011. In the Western Cape the population grew by 28.6%, from just under 4m to 5.9m in the same period.

Schüssler said the comments were not to simply find reasons for the inequalities, but to show what is driving the inequality in the country.

Jammine told Moneyweb that until South Africa improves the education levels within the Black African population, “we’re not going to get rid of income disparities”.

FNB’s CEO is of a similar view:

Recent events such as the labour unrest in South Africa has shown that a growing number of South Africans are tired of the inequalities and becoming restless. Jammine said that while the National Development Plan and the infrastructure rollout plan aims to eradicate the inequality, these are long-term plans and there is short-term dissatisfaction.

“But if you don’t have these long-term plans, there is no solution,” he said.

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