This past weekend saw President Jacob Zuma announce that we are to see “decisive action to thoroughly and urgently transform economic patterns of the present”. Last week the president pointed to racial household inequality as “bad for reconciliation”.
He could do better by listening to the Jacob Zuma who addressed the National House of Traditional Leaders in November, saying that “notions that the gap between rich and poor in South Africa is widening is a farce”. For inequality, whether between rich and poor or black and white, has been narrowing these 18 years of full democracy, even dramatically.
In the first instance, a blunt instrument called the Gini coefficient marks the difference between rich and poor. This formula assigns a figure between 0 and 1 as its measure, where 0 is the pure equality of everyone having the same income, and 1 where pure inequality exists (one person has all income). According to the 2012 SA Survey, the Gini coefficient has improved in this country from a high of 0,68 in 2005 to 0,63 today.
More dramatic have been changes in personal income. Labour market research company Prophet Analytics points out that after-inflation incomes have risen sharply in just the past decade from R44 431 a year in 2000 to R61 645 at current prices in 2011. Where blacks earned 15% of the average white South African’s income in 2000, this rose to 40% by 2011. Prophet Analytics quantitative analysis director Peter Aling adds that “Currently 1,3 million blacks (or 14% of the black workforce) earn as much as or more than the average white, up from 270 000 in 2000 – an increase of more than 1 million people, or 378%”.
Meanwhile, the 2011 census shows household incomes increasing by 7,9% every year between 2001 and 2011 against consumer price inflation of 5,1% a year.
Some of this has to do with government’s own sleight of hand. For one thing, it has acted as a job reservoir to a greater extent than it admits. Aling points to civil service employment which he says has risen to 2,83 million people, meaning that one in five South African workers now works for the state. The proportion of blacks in the civil service has risen from 42% to 74%.
But that isn’t how it looks in the national accounts, where government states that only 35% of the annual national budget is spent on wages, and through government appearing to agree to 5,4% wage increases for civil servants. Prophet Analytics calls these representations “wrong and probably deceitful”, saying government actually spends 88% of the budget on salaries and that it uses the twin mechanisms of promotion and job re-grading to pay higher wages than its public sector wage agreements allow. One result, says Aling, is that “the average remuneration of civil servants is now 32% higher than that of private sector workers”.
For its part, the private sector is home to three-in-five of South Africa’s highest-earning blacks, about 820 000 people. If current trends of shrinking income inequality carry on, there will be 5,1 million blacks earning more than the average white by 2020. The racial income gap will have disappeared within a decade.
(Published in The Citizen, January 2013)
– By Paul Pereira