Declining Poverty Rates in South Africa

There is good and bad news about poverty in South Africa: The good news is that poverty is declining, as is the gross discrepancy between white incomes and those of everybody else. The bad news is that it is happening very, very slowly. That is the conclusion reached by Rebecca Davis in The Daily Maverick following the release of a new report by the South African Institute of Race Relations (SAIRR) that looks at the economic performance of blacks since the coming of “non-racial” democracy in 1994.

Some encouraging statistics that she cites are: the number of employed black people has doubled since 1994; black, “coloured,” and Indian business owners are three times more numerous than white business owners; black automobile ownership has doubled over the past eight years; and black poverty has dropped by 11 percent, mostly because of social grants.

In 2005, whites earned on average of five times as much as blacks. By 2011, that ratio had fallen to four times as much. But despite this, whites still hold 73 percent of “top management jobs” and 62 percent of “senior management” jobs. Whites make up about 9 percent of South Africa’s population, blacks about 80 percent.

Davis concludes that the difference in employment rates between whites and blacks is the key determinant of South African poverty. The unemployment rate among blacks is as high as 45 percent: for every black South African who was employed in 1994, there were 4.9 unemployed. In 2013 that number was 3.3. For whites in 2013 the ratio of unemployed to employed was 1.4. “Unemployed” includes children, the elderly, etc., as well as those a part of the work force but without jobs.

Davis quotes SAIRR’s Lerato Moloi as stating that addressing racial inequality depends on “the three E’s–education, entrepreneurship, and economic growth.” Moloi sees progress as depending “less on racial policies like Black Economic Empowerment and more on ensuring access to sound education while fostering a climate conducive to economic growth.”

It is hard to quarrel with that conclusion.

SAIRR statistics are sound yet it is important to note that they are measuring income, not net wealth, which includes other assets besides income. In the United States, where discrepancies between white and black incomes is less than in South Africa, the average net worth of whites is twenty times greater than that of blacks, according to Pew Research Center analysis of census data from 2009. The net wealth discrepancy between the races is likely even greater in South Africa.