The Department of Planning, Monitoring and Evaluation, in cooperation with Stats SA and the World Bank, recently published a report looking at the make up and drivers of the middle class in South Africa.
According to the report, South Africa’s middle class is significantly smaller than most reports would suggest, because only 25% of South Africans can be considered “stably middle class” or elite.
The other three quarters are either poor or face an elevated risk of falling into poverty, the group said.
“The size of the middle class is thus considerably smaller, and growth has been more sluggish than suggested by other studies,” the group said. About 14% of the population is in the vulnerable group – that is, a substantial share of the non-poor still face a considerable risk of falling into poverty.
Among the poor, about 80% could be considered chronically poor (accounting for half of the South African population), whereas the remaining 20% of the poor (accounting for 13% of the population) could be classified as transient poor.
At 20% of the population, the share of the middle class in South Africa is relatively small. For example, close to 80% of the population of Mauritius could be classified as middle class.
The growing black middle class
While the middle class story being told may not be as optimistic as the reality, the data does show that the racial demographics of South Africa’s middle class and elite are steadily changing.
Historically dominated by white South Africans, between 2008 and 2014/15, there has been a marked improvement for both the Indian/Asian and black African demographics in transitioning to the middle and upper classes.
However, white South Africans still dominate the ‘elite’ class in South Africa.
This graph shows the make up of South Africa’s classes by race, according to the World Bank’s report. The threshold used to determine middle class is the upper-bound poverty line (2015) of R992 per person per month.
According to the World Bank, classes in South Africa clearly differ in their access to the labor market: the more disadvantaged the class of a household, the more likely the household head is unemployed or economically inactive.
Only 31% of household heads among the chronically poor are employed, with the remainder being economically inactive or unemployed. Among the transient poor and the vulnerable, about 50% are employed.
This figure rises substantially for the middle class and elite. About 80% of the household heads in these two classes are economically active and the employment rate is above 75%.
“Overall, employment of any household member raises significantly the probability that the household will escape extreme poverty, and getting a skilled job further significantly increases the probability,” the group said.
“Those who have remained out of poverty live in households with heads who are more likely to actively participate in the labor market, and of those who participate, a substantially larger share are employed.”
The employed can be categorised into five types of economic activity: subsistence agriculture (accounting for a marginal share of total employment in South Africa), casual work, self-employment, employees with temporary or time-limited work contract, and employees with a permanent work contract.
Precarious forms of work, including casual employment and employment without a permanent contract, constitute the largest share of all jobs among the poor and the vulnerable, whereas among the middle class and elite, 80% of all household heads who work as employees have a permanent contract.
Types of jobs
The World Bank’s report also broke down the types of positions held across the class types.
For household heads belonging to transient poor and vulnerable households, elementary occupations dominate, followed in significance by service and sales occupations.
Among the middle and elite classes, a very high proportion of household heads are employed in highly skilled occupations, such as managers, professionals, or technicians.