The World Bank’s latest and third South Africa Economic Update published in Johannesburg says the country remains one of the most unequal societies in the world.
Focusing on inequality of opportunities, the report says on one hand the potential for economic growth has been held back by industrial concentration, skills shortages, labour market rigidities and chronically low savings and investment rates; one the other hand, economic growth has also been highly uneven in distribution, perpetuating inequality and economic exclusion.
“With an income Gini coefficient of around 0.70 in 2008 and a consumption Gini coefficient of 0.63 in 2009, South Africa stands as one of the most unequal countries in the world,” says Asad Alam, World Bank Country Director for South Africa.
“The top deciles of the population accounts for 58% of the country’s income while the bottom deciles accounts for 0.5% and the bottom half less than 8%. In large part, this an enduring legacy of the apartheid system, which denies black people, especially Africans, the chance to accumulate capital in any form – land , finance, skills or social networks."
Unemployment which stands at 25.2% or 33% when including discouraged work seekers is among the world’s highest.
Asad says South Africa’s average growth rate of 3.2% a year since 1995 has meant that the country is not able to create employment opportunities at a scale large enough to absorb the yearly wave of new entrants to the labour market. This is seen as the heart of inequality.
“Unemployment which stands at 25.2% or 33% when including discouraged work seekers is among the world’s highest. No surprise then that despite an almost 30% increase in per capita growth since the late 1990s, reductions in poverty has been modest at best,” he says.
"This would have been untenable without the growing social assistance grants. Non-contributory and means test – except for foster care- financial transfers account for more than 70% of the income of the bottom quintile – up from 15% in 1993 and 29% in 2000."