[P2P-F] Fwd: Inequality in South Africa: Beyond the 1%

Sun Jul 22 11:38:36 CEST 2018

---------- Forwarded message ----------
From: Ryan Fortune <ryan.fortune2012 at gmail.com>
Date: Fri, Jul 20, 2018 at 4:01 PM
Subject: Inequality in South Africa: Beyond the 1%
To: michel at p2pfoundation.net

Contemporary South Africa has been described as a country with extreme
inequality and we are, in fact, a total outlier in terms of income
inequality.

*Op-Ed: Inequality in South Africa: Beyond the 1%*
<https://twitter.us2.list-manage.com/track/click?u=00451369d2404e52ccee430a8&id=57c630f51f&e=96e15d4563>
*By Fazila
Farouk and Murray Leibbrandt*

*When we talk about South Africa’s inequality, there are some
characteristics that don’t quite mirror global patterns of wealth and
income distribution. Contemporary South Africa has been described as a
country with extreme inequality and we are, in fact, a total outlier in
terms of income inequality. *

When we talk about South Africa’s inequality, many of us accept the fact
that we live in a country where a small portion of the population is
wealthy amongst a majority that are poor. We may feel some unease about it,
but looking beyond South Africa, we see that inequality has become a
defining feature of global society in the 21st Century.

Few countries are immune to it.

The notion that there’s this enormous economic imbalance between elites and
the rest of us received a lot of coverage in the aftermath of the 2008
global financial crisis when the idea of the 1% versus the 99% was
introduced.

Most of us take comfort in the fact that we’re part of the 99%. It allows
us to occupy the moral high ground and carry on with our lives secure in
the knowledge that we’re not part of the problem.

Donald Trump, Jacob Zuma, the Guptas, Goldman Sachs, Russian oligarchs,
filthy rich oil sheikhs – these are the kinds of people who personify the
worst of a rapacious elite class and everything that’s wrong with our
global economic system. The rest of us are just ordinary people doing our
best to get on with our immediate lives.

It’s hard to fault this narrative. But when we talk about South Africa’s
inequality, there are some characteristics that don’t quite mirror global
patterns of wealth and income distribution. Contemporary South Africa has
been described as a country with *extreme* inequality and we are, in fact,
a total outlier in terms of income inequality.

The notable difference between us and other countries is that the share of
income captured by our top 10% and especially the top 5% is excessive.

UCT’s *Southern Africa Labour and Development Research Unit (SALDRU)*
<https://twitter.us2.list-manage.com/track/click?u=00451369d2404e52ccee430a8&id=bd5043ea7b&e=96e15d4563>
identified
the problem a few years ago, but it recently achieved global prominence in
the *2018 World Inequality Report*
<https://twitter.us2.list-manage.com/track/click?u=00451369d2404e52ccee430a8&id=6365ba42f7&e=96e15d4563>,
which states, “In 2014, the top 10% received two-thirds of national
income.” The report’s editorial team includes Thomas Piketty and it
references SALDRU’s research on income distribution in its country focus on
South Africa.

Victor Sulla, who is the lead author of a 2018 World Bank Report on poverty
and inequality in South Africa also *had this to say*
<https://twitter.us2.list-manage.com/track/click?u=00451369d2404e52ccee430a8&id=901c192e7d&e=96e15d4563>
about
our extreme income inequality: *“The people at the bottom in South Africa,
they get wages comparable to the people who live in Bangladesh. It’s very,
very poor. Wages of less than $50 a month. If you take the top 10%, they
live like in Austria. So, it’s a very high level even by European standards
or even by US standards. And we are talking just about employees, people
who are getting paid. And not the super-rich who are earning income from
factories or property or other investments.”*

The World Bank also made extensive use of a SALDRU input paper in this
country report on South Africa.

In short then, South Africa certainly has a 1% problem – but beyond this,
we also have a 10% problem, which needs to be consciously considered when
we think about how to address our crisis of inequality.

Economists at SALDRU have been gathering data about household incomes for
many years. We’ve become progressively concerned about the shape of South
Africa’s income distribution and feel that it’s becoming increasingly
important to engage all South Africans in a conversation about the kind of
society we want to live in.

This is why SALDRU launched an interactive online *income comparison tool*
<https://twitter.us2.list-manage.com/track/click?u=00451369d2404e52ccee430a8&id=d6276533fc&e=96e15d4563>,
which allows South Africans to compare their incomes to the rest of the
population. After users submit basic information about their incomes and
the number of individuals living in their households, the tool allows
people to see where they are positioned in the income distribution from the
poorest to the richest in the country. SALDRU doesn’t store or share the
information submitted and the user interacts with the tool anonymously.

It’s hard to visualise South Africa’s distorted income distribution until
it’s plotted on a graph. The result is devastating to behold. SALDRU’s
income comparison tool was designed to help people visualise and understand
the extreme nature of South Africa’s’ inequality. For us, it’s also
important that people are able to see themselves reflected in South
Africa’s story. So, every South African who engages with the tool is able
to see where they fit in the bigger picture.

Hopefully, people will take the opportunity to reflect on their position in
our society as well as the position of others and consider what bearing
this has on our country’s inequality. By allowing us to know, rather than
speculate on where we and others lie on the income distribution, we hope
that the tool inspires some deep reflection about how contemporary South
Africa is actually working out for its citizens. SALDRU hopes that the tool
encourages South Africans to think about the kind of society we want to
create for ourselves and our fellow citizens.

Given our long history of racial oppression and exploitation, race matters
a huge deal in South Africa’s income distribution, especially when it comes
to who’s wealthy, who has a stable income, who’s just one pay cheque away
from falling into poverty and who, despite all their efforts, will never
claw their way out of poverty.

Some of *SALDRU’s research*
<https://twitter.us2.list-manage.com/track/click?u=00451369d2404e52ccee430a8&id=be2993b1c8&e=96e15d4563>,
which also tracks the social progress of South Africa’s race groups over a
period of time, finds that a disproportionate amount of the poorest South
Africans remains black and to a lesser extent, coloured.

And while there are some black South Africans who’ve entered the stable
middle class, their numbers are small relative to the overall size and
share of the black population. We’ve all heard about the “black diamonds”,
but this notion of a burgeoning black middle class that is having a
positive, transformative effect on our society, is not borne out in the
data, nor is it borne out in what black South Africans are saying about
their day-to-day realities.

At the same time, we find virtually no whites living below the middle
class. Whites have, in fact, comfortably improved their economic status in
post-apartheid South Africa because our economy channels such a big share
of national income to the top 10%.

The actual nature of the inequality gap in South Africa sees up to three
quarters of the population really battling to get by. This is a far higher
ratio of vulnerable to better off than in nearly every other country in the
world. Our income comparison tool shows that a staggering 79% of South
Africans live in households where the income per person is less than the
minimum wage.

Meanwhile, half of all South Africans are chronically poor, living in
households with a per capita income of R1,149 or less per month. There’s
very little income mobility for this group of South Africans. Put bluntly,
they’re stuck. Yet these are also some of our hardest working citizens, be
they domestic workers, farm labourers or security guards. Their low
earnings limit their ability to focus on anything except the immediate
struggle to get by. They just don’t have the financial or social resources
to build a better life for their children.

One’s ability to achieve a better position than one’s parents in the
distribution of income reflects a society that is creating opportunities
and social mobility. Social scientists refer to this as *intergenerational
income mobility*. But underlying South Africa’s inequality gap, is a
situation in which income mobility remains an impossible challenge for
large swathes of our population.

Some SALDRU researchers conducted a *study on income mobility*
<https://twitter.us2.list-manage.com/track/click?u=00451369d2404e52ccee430a8&id=56165541b1&e=96e15d4563>
focussing
on labour market earnings and found that there are virtually no prospects
for children from low-income families to find themselves in a better
position on the income distribution than their parents. The study finds
similar immobility or “stickiness” at the top end of the distribution,
indicating that the children of the well-off are also locked into their
economic class.

Based on such findings, this study classifies South Africa as a low
mobility society and challenges the notion that one’s background doesn’t
hinder one’s prospects for progress. In low mobility societies, getting
ahead in life has less to do with a person’s individual characteristics and
more to do with the inheritance of advantage and disadvantage.

Consequently, South Africans live in a low mobility society in which the
poor continue to inherit disadvantage whilst the well-off continue to
inherit advantage. These are the labour market and social dynamics that
underlie the extreme inequality that is reflected in the income tool.

In 1964 when Nelson Mandela stood in the dock at the Rivonia Trial to
deliver his famous *I am prepared to die*
<https://twitter.us2.list-manage.com/track/click?u=00451369d2404e52ccee430a8&id=7561c97818&e=96e15d4563>
closing
statement, he reflected on a society in which: “The whites enjoy what may
well be the highest standard of living in the world, whilst Africans live
in poverty and misery.”

He went on to talk in some detail about the earnings of black South
Africans and the lifestyle difference between black and white citizens.
Above we show that these continue to echo in contemporary South Africa.

As we commemorate the 100th anniversary of Mandela’s birth, it’s a tragedy
that so little has changed about the character of our society in the 54
years since he made that speech.

Isn’t it time we changed the narrative? *DM*

*Access SALDRU’s income comparison tool*
<https://twitter.us2.list-manage.com/track/click?u=00451369d2404e52ccee430a8&id=57e8ffd3cf&e=96e15d4563>

*Fazila Farouk is the communications manager of the Southern Africa Labour
and Development Research Unit (SALDRU), a research unit in the School of
Economics at the University of Cape Town. Prof Murray Leibbrandt is
SALDRU’s director.*
<https://twitter.us2.list-manage.com/track/click?u=00451369d2404e52ccee430a8&id=2a12d75531&e=96e15d4563>
<https://twitter.us2.list-manage.com/track/click?u=00451369d2404e52ccee430a8&id=e6518709d3&e=96e15d4563>
<https://twitter.us2.list-manage.com/track/click?u=00451369d2404e52ccee430a8&id=dc1596146c&e=96e15d4563>
*Copyright © 2018 Ryan Fortune, All rights reserved.*
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