SA still living with legacy of poverty

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Econometrix chief economist Azar Jammine has again warned that South Africa remains one of the most unequal societies in the world. Citing Bureau for Market Research figures, he notes that 75% percent of South Africa’s population earned less than R4 000 a month while 4 percent earned more than R60 000.

He believes that growing inequality – fuelled by the upper income earners regularly increasing their incomes by up to 50 percent a year – appeared to “have exacerbated the crime rate” as the destitute turned to crime to survive.

This situation, Jammine said, contributed to “a vicious circle of emigration of skilled persons, a rising shortage of skills within the economy and the resultant continuing growth in inequality”.

Business Report newspaper last week carried a study that painted “a brutal picture of the government’s failure to substantially roll back poverty.” The report, titled Recession and Recovery, was produced by the Institute of Justice and Reconciliation (IJR) in its annual 2009 Transformation Audit, the business broadsheet said. It came with a frank admission by presidential economist Vusi Gumede that poverty levels remained persistently high.

The report notes that the rapid expansion of social assistance grants over the past 15 years “has made a significant contribution to reducing poverty but has done little to reduce inequality”. But the figures indicate that poverty, despite the provision of about 13.5 million social grants, remains stubbornly high.

The Business Report added that according to the Southern Africa Labour and Development Research Unit, seven out of 10 South Africans are poor, if the upper poverty line of R949 per person per month is used. The poor represented 72 percent of the population in the last year of apartheid in 1993. It now stands at 70 percent. The potential for the economy to absorb even skilled labour seems dim.

Jan Hofmeyr, the head of the IJR’s political analysis unit, predicted that growth of between 2% and 3% this year was unlikely to translate into similar growth of jobs as employers would focus on productivity before expanding their workforces. He said that the local economy had generated a model of “inequality-perpetuating growth” and the current shape of the labour market’s strong demand for skills coupled with an oversupply of unskilled reinforced this pattern.



Over the 15-year period, the population grew faster than poverty fell, so that the number of poor people had grown in absolute terms. Using the lower poverty line of R515 a month, there were about 22 million poor people in South Africa in 1993 and this rose to 26 million in 2008. p