Income disparities widen in SA

JOHANNESBURG – Income disparities among black South Africans are on the rise as a new middle class emerges while the poor get left behind, according to a new report by the South African Institute of Race Relations.

In its annual South Africa Survey, the think tank said that levels of inequality, using the Gini coefficient, had increased for all race groups except whites since 1996. The Gini coefficient is a measurement of income and wealth distribution widely used by economists.Under it, zero corresponds to perfect equality where everyone has the same income while 1 refers to total inequality where one person earns everything.”Increases were most dramatic for the African population which saw levels of inequality rise by 21 per cent to 0,64 on the Gini coefficient since 1996,” said the institute.”Inequality within the coloured community increased by 17 per cent to 0,56, the Indian population recorded a six per cent increase in inequality to 0,50 while the white community saw its levels of inequality decline by two per cent to 0,44,” it said.Glaring income disparities and a jobless rate of close to 26 per cent are widely blamed for rampant violent crime and other social ills in Africa’s largest economy.But there has been much heated debate over how much disparities have widened since the end of white-minority rule in 1994 and what it all means for levels of absolute poverty.The government says it has made significant inroads into reducing poverty through child support and pension grants as well as the provision of low-cost housing.It also says inflation targeting and fiscal prudence are creating the conditions needed for the sustained growth needed to create jobs and slash poverty.The economy grew a brisk 4,9 per cent last year, its fastest level in over two decades.But the SAIRR said things appeared to be getting bleaker for the lowest income groups.The flip side is the emerging black middle class which has been one of the main drivers behind a spending boom reflected in surging car sales, soaring real estate prices and faster economic growth.”While growing inequality is in part an indication of the growth of the black middle class, and therefore a positive indicator, it is of concern that such growth has been accompanied by an increase in poverty among the lowest income groups,” said Jane Tempest, head of research at the Institute.The survey said data showed that the number of people living on less than a dollar a day, the main measure of absolute poverty, had more than doubled since 1994 to over four million.”Using a different measure of poverty 50 per cent of South African households lived on less than 2 899 rand per month for a household of eight in 2004, up from 40 per cent in 1994,” it said.There are other recent studies which suggest that job growth is taking off in South Africa – but that follows a decade of steep job losses incurred as the former political pariah opened its markets and integrated into the global economy.Job growth has also failed to keep pace with population growth while an AIDS pandemic is adding to poverty in households.-Nampa-ReutersThe Gini coefficient is a measurement of income and wealth distribution widely used by economists.Under it, zero corresponds to perfect equality where everyone has the same income while 1 refers to total inequality where one person earns everything.”Increases were most dramatic for the African population which saw levels of inequality rise by 21 per cent to 0,64 on the Gini coefficient since 1996,” said the institute.”Inequality within the coloured community increased by 17 per cent to 0,56, the Indian population recorded a six per cent increase in inequality to 0,50 while the white community saw its levels of inequality decline by two per cent to 0,44,” it said.Glaring income disparities and a jobless rate of close to 26 per cent are widely blamed for rampant violent crime and other social ills in Africa’s largest economy.But there has been much heated debate over how much disparities have widened since the end of white-minority rule in 1994 and what it all means for levels of absolute poverty.The government says it has made significant inroads into reducing poverty through child support and pension grants as well as the provision of low-cost housing.It also says inflation targeting and fiscal prudence are creating the conditions needed for the sustained growth needed to create jobs and slash poverty.The economy grew a brisk 4,9 per cent last year, its fastest level in over two decades.But the SAIRR said things appeared to be getting bleaker for the lowest income groups.The flip side is the emerging black middle class which has been one of the main drivers behind a spending boom reflected in surging car sales, soaring real estate prices and faster economic growth.”While growing inequality is in part an indication of the growth of the black middle class, and therefore a positive indicator, it is of concern that such growth has been accompanied by an increase in poverty among the lowest income groups,” said Jane Tempest, head of research at the Institute.The survey said data showed that the number of people living on less than a dollar a day, the main measure of absolute poverty, had more than doubled since 1994 to over four million.”Using a different measure of poverty 50 per cent of South African households lived on less than 2 899 rand per month for a household of eight in 2004, up from 40 per cent in 1994,” it said.There are other recent studies which suggest that job growth is taking off in South Africa – but that follows a decade of steep job losses incurred as the former political pariah opened its markets and integrated into the global economy.Job growth has also failed to keep pace with population growth while an AIDS pandemic is adding to poverty in households.-Nampa-Reuters