THE gap between the rich and poor in South Africa has widened, not only between race groups but also within race groups, suggesting that the government needs other policies besides black empowerment to redistribute wealth.
This is according to a report published by the Organisation for Economic Co-operation and Development (OECD), which says income inequality in South Africa increased between 1993 and 2008, making inequality levels in the country among the highest in the world.The report, researched and written by the Southern African Labour and Development Research Unit at the School of Economics at the University of Cape Town, says levels of poverty and inequality continue to bear a persistent racial undertone.But the most important conclusion is that inequality and poverty among Africans have increasingly dominated the aggregate measures.’While between-race inequality remains high and is falling only slowly, it is the increase in intra-race inequality (that) is preventing the aggregate measures from declining. Therefore policy initiatives (that) address the increase in intra-racial inequality are recommended, rather than those focused solely on redistribution between inter-racial population groups.’The report says race-based redistribution may become less effective over time relative to policies addressing increasing inequality within each racial group, and especially among Africans.Rising inequality within the labour market – due to rising unemployment and rising earnings inequality – lies behind rising levels of aggregate inequality.’These labour market trends have prevented the labour market from playing a positive role in poverty alleviation.’The report says that although real incomes have been rising for all groups over the long run, many Africans in the country still live in poverty.’At any poverty line Africans are very much poorer than coloureds, who are very much poorer than Indians, who are very much poorer than whites.’Social grants have altered the levels of inequality only marginally, but have been crucial in reducing poverty among the poorest households.Lumkile Mondi, the chief economist at the Industrial Development Corporation, said inequality was increasing on all fronts – between race groups and within race groups. ‘So it’s a class problem.’He said the focus in the past 15 years had been on deals for black people with access to power, leaving behind the poor.’We need policies that address class, rather than talk to race,’ he said.Athol Trollip, the DA’s parliamentary leader, said it was clear from the OECD’s findings that the government’s socio-economic policies had not done enough to adequately address the yawning gaps of the past.’Instead the gap between the rich and the poor continues to increase, largely due to the fact that many of these policies have only served to reward a handful of people based on their position in and ties to the ANC government,’ he said.However, Duma Gqubule, from black economic empowerment (BEE) consultancy KIO Advisory Services, said that it was ‘absolute rubbish’ to blame inequality on BEE, particularly ownership deals.’Inequality is due to a lack of jobs and the education system,’ he said.EDUCATION FACTORGqubule said education was the biggest leveller, but in South Africa ‘the education system is genocidal on black children’.He dismissed views that spending on education was already too high and said far more needed to be spent on education to level the playing fields for all schools.’Massive financial resources should be spent on education. Anyone who has seen a township school knows it will take money to fix the problem,’ he said.Gqubule said a redistribution of wealth could only be done with more aggressive tax on the first economy.The OECD report noted that despite the increase in educational attainment, younger people had the highest incidence and share of poverty and this had not improved notably over time.The report said: ‘The fact that better educated people remain poor suggests the labour market has not been playing a successful role in alleviating poverty and that the education system is not delivering the skills needed in the labour market.’There had, however, been continual improvements in non-monetary well being, for example, access to piped water, electricity and formal housing, between 1994 and 2008.- Business Report
