Black diamonds sparkle -- for some

Arising tide might not be lifting all the boats, but at least the boats being raised are not all the same colour.

A new survey released by the Bureau of Market Research (BMR) at Unisa has found that, although incomes continue to grow faster for the well-off than for the poor, there are unprecedented numbers of Africans entering the middle class.

“The bulk of the South African adult population still falls into the R0 to R50 000 per annum income group, despite relatively high levels of economic growth over the past two decades,” said Professor Carel van Aardt, the director of income and expenditure research at the BMR. “Although we are seeing a considerable degree of deracialising of the middle class.” But South Africa does remain a staggeringly unequal place.

As with all such surveys, some statistics cast the extent of the disparities in cruel relief: 1,6% of the population - about 522 337 adults—earned 25% of all personal income. And, at the opposite end of the scale, 25-million South Africans - 85% of the total population—earned just 22% of the total income.

Many of the BMR’s findings are relatively predictable. If you are white, male and in Gauteng (preferably Pretoria), the chances are you are well off.

If you are black, female and in the Eastern Cape or Limpopo, your probability of having enjoyed a considerable change in living standards in the past two years are small. But the survey does reveal answers to three questions in particular that are far more absorbing.

Growth rates
First, what have been the dynamics of relative income growth across South Africa during the economically traumatic past three years?

According to the BMR, “during 2008 to 2010, low personal income growth rates (in nominal terms) were experienced by adults in the lower income groups, which can largely be explained by the after-effects of the 2008 to 2009 recession on personal income growth in South Africa.

The job losses of recent years, which were between 50 000 and 300 000 jobs per annum, have been detrimental to the low-income sectors of the population.

“By contrast, higher income groups experienced relatively high personal income growth rates as they recovered more rapidly after the recession due to the high skills levels that they offer to the labour market/economy.”

The question is, are these groups as lily white as before?

It is true that the general economic dynamics in South Africa since the end of apartheid—growth being driven by productivity increases and capital investment as opposed to job creation—have continued. Growth has not been completely jobless, but it is far from being labour intensive.

The disparities
The second question the survey tries to address is the extent of the disparities between private and public sector workers.

As our economy reels from the effects of the recent strike, what are the differences between the incomes in the public sector and similarly qualified workers in the private sector?

It is extremely hard to compare as there are so many sectoral and economic differences between them, but the studies do raise serious questions about recent assertions by the labour union Cosatu that government workers are underpaid.

The final question that the survey answers is crucial—is the South African middle class finally becoming increasingly deracialised?

Van Aardt is candidly bullish about this phenomenon. “There is no doubt. Deracialisation is extremely prevalent.

New revelations
“We divide the middle class into two groups—emerging (who earn R300 000 to R500 000 per annum) and realised (R500 000 to R750 000). For the first time in South Africa’s history the emerging middle class is predominantly African, as they now actually outnumber emerging middle-class whites.”

This is predominantly an urban phenomenon, particularly prevalent in Gauteng and KwaZulu-Natal. “We are seeing a metro-fication of African growth and wealth.”

The survey also made the unusual discovery that the wealthiest of the middle class tend to be much younger than in other countries.

In economies most similar to South Africa there is a earnings increase in proportion with age—the older the worker, from mid-twenties to retirement, the more they earn. But in South Africa, possibly because of empowerment policies, the wealthier members of the emerging middle class are young and middle-aged Africans. But it is not all good news.

Perhaps the most critical demographic group in South Africa today is low income, uneducated, African youth. In 1985, almost 40% of the country’s population was under the age of 15.

What happened to the 40%?
What has happened to that generation? Have they started to break into the middle class?

“Absolutely not,” says Van Aardt. “This is the crux of South African labour dynamics—job creation has failed to benefit and offer opportunities to the most needy, disenfranchised and frustrated.”

The greatest single disparity among employment and income prospects is between young African males with and without university qualifications. For those below the age of 50 who have been to university, unemployment rates are below 8%—that is lower than the United States.

For young African males without tertiary qualifications unemployment is as high as 60%. “This is worse in villages and rural areas, and it is a worryingly stubborn phenomenon” Van Aardt says.

Thus, despite the increasing numbers of a black, urban, educated middle class, redistribution in South Africa has an awfully long way to go. The Julius Malema generation of 1980s apartheid school-leavers is here to stay.

 

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