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In today's blog we take a look at the skewness of South Africa's income. Just how unequal is income distributed amongst South African households? And are we improving over time or are things getting worse?
The worst possible outcome for South African's would be the rich getting richer and the poorer 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. The graphic below and discussion next to it takes a look out South Africa's distribution of income and whether its getting better better or worse over time. |
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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. Note siginificant reworking of data took place in order to obtain these estimates |
In 2001, the bottom 20% of households contributed 0% to total income earned in South Africa. Infact 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 impoved 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, 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 impoved 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.
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Table analysis:The table to the left 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.
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