Just how unequal is South African society, and who controls the economy? Over the weekend political analyst Moeletsi Mbeki said the elite in South Africa, those in “control”, only comprised of just over 100 000 people – “you can fit all of them into the FNB stadium.” He also said that there are a huge number of black people in that category in the private sector, talking about this myth of white control that the ruling party doesn’t want the populous to know about. And while statistical economist John Maynard’s analyis below doesn’t look at the racial make up of income distribution, it focuses on its skewed nature in South Africa. He asks the question, how unequal is income distributed amongst households? And more importantly, are things improving or getting worse? It’s an interesting analysis which sees the numbers showing minimal progress between 2001 and 2011. And a worse case scenario sees the rich getting richer, while the poor get poorer. – Stuart Lowman
By John Maynard*
The worst possible outcome for South African’s would be the rich getting richer and the poor getting poorer, as such a model will never be sustainable over the long run. South Africa’s structure is such that it has a very small group earning a lot, and a massive group of people earning almost nothing, with a very small middle class. The more equally distributed a country’s income the less risk a country runs of animosity towards certain groups, be they economic, racial or cultural.
In a ideal world, income would be perfectly distributed amongst households (this is represented by the blue line in the graphic). 20% of households will earn 20% of total income, 40% of households will earn 40% of total income etc. The further away one moves from this line the more unequal the distribution of income.
The orange line shows South Africa’s distribution of income amongst households based on 2001 Census data.
The green line shows South Africa’s distribution of income amongst households based on 2011 Census data.
In 2001, the bottom 20% of households contributed 0% to total income earned in South Africa. In fact 23.2% of all households in 2001 reported to have no annual household income. In 2011, the bottom 20% of households contributed 0.73% of total income earned by households. While this is an improvement over the last 10 years, its hardly enough to uplift the poor and to reduce their irritation and frustration with being impoverished and not seeing any real improvement over the last decade. Its hardly surprising that there are so many protests demanding services and jobs.
In 2001, the bottom 40% of households contributed 2.13% of total income earned by households, in 2011 this has improved to 3.12%, again while this is an improvement it hardly screams the development of a strong middle class in South Africa. In 2001, the bottom 60% of households contributed 7.27% of total income earned by households, in 2011 this has improved to 8.33%.
In 2001, the bottom 80% of households contributed 19.67% of total income earned by households, in 2011 this has improved to 21.12%, this category showed the biggest improvement from 2001 to 2011, basically implying that income from households between the bottom 60% and bottom 80% grew at faster rate than say income earned from households between bottom 20% and bottom 40%.
In 2001 households between bottom 60% and bottom 80% contributed 12.4% of total household income earned, by 2011, this increased to 12.79%. This shows growth in the upper middle income households in South Africa. But still leaves South Africa with a very small middle and lower middle class.
While progress has been slow, the fact that the green line (2011) has moved closer to the blue line, when compared to the orange line (2001), shows that progress has been made to address South Africa’s income inequality. But there is still a very long way to go. And the longer it takes the more unrests via protests we will experience.
| Household Group | Contribution to total income (2001) | Contribution to total income (2011) |
| 0% to 20% (Poorest 20%) | 0.0% | 0.73% |
| 20% to 40% | 2.13% | 2.39% |
| 40% to 60% | 5.14% | 5.20% |
| 60% to 80% | 12.40% | 12.79% |
| 80% to 100% (Richest 20%) | 80.33% | 78.88% |
Table analysis
The table above shows the contribution of the various household groups to total income (for both 2001 and 2011). From the table its clear that the poorer household groups has made progress in terms reducing the contribution made by the richest household group but there is still a long way to go to get that green line closer to the blue one.
- John Maynard is the nom de plume of an independent economist who is obsessed with official statistics – and uses these facts to blast through misleading narrative and propaganda. For more of his unique insights click here.
From News24
White people do not control SA economy
By Thulani Gqirana
Cape Town – White people do not control the economy of South Africa, that is a myth, analyst Moeletsi Mbeki said on Saturday.
Political economist Mbeki, former IEC head Brigalia Bam and City Press editor Ferial Haffajee were discussing the strategies needed to protect South African’s democracy.
Speaking at the Franschhoek Literary Festival, Mbeki said if one listened to the ruling party, all they heard was that white people controlled the economy and black people were out of it.
“There is this notion that there has been no change, or just… it is superficial,” he said.
He said this was a narrative that was being perpetuated by the ruling party.
“The ruling party sees the racial narrative as of benefit to it,” he said.
He made an example of the recent case against former estate agent Penny Sparrow, who the ANC had opened a case against for racist comments made earlier this year.
Sparrow had compared black people to monkeys.
Mbeki said the ANC, however, had expected South Africans to forgive President Jacob Zuma, following the Constitutional Court ruling regarding his Nkandla homestead.
He said the elite in South Africa, those in “control”, only comprised of just over 100 000 people.
“You can fit all of them into the FNB stadium.”
There was a huge number of black people in that category in the private sector, he said.
Ruling elite
Mbeki said the ruling party did not want it announced that only 100 000 people controlled the economy.
“Because then where is this democracy they are supposed to have brought? They don’t want the narrative that the great majority are not in control of their politics and their economy,” he said.
He said it was possible, however, for South Africa to get past the racial divide.
Mbeki also questioned the electoral system in South Africa, which he said excluded the masses.
He said there was a façade that structures on ground level decided who went to Parliament and who was in leadership positions.
But it was the top six of the ANC, DA, EFF and other parties that decided who represented them, he said. – News24
Source: http://www.news24.com/SouthAfrica/News/white-people-do-not-control-sa-economy-20160514
