South Africans have become poorer over the last 6 years: government

Poverty rates in South Africa remain unacceptably high for a middle-income country, says the Department of Social Development.

In a revised white paper on families published on Friday (2 July), the department said that while poverty levels improved between 2005 and 2011, they have since then stagnated and worsened – citing data collected from Home Affairs, Statistics South Africa and other government sources.

“Statistics South Africa reported an improvement between 2006 and 2011 when poverty levels, measured by the lower-bound poverty line, reduced from 66.6% to 53.2% of the South African population.

“However, by 2015 the poverty rate had started to increase again up to 55.5%. This increase in poverty rates also affects the depth of poverty which improved between 2006 and 2015 but worsened again post-2015.”

Although major gains have been made in improving multi-dimensional poverty – primarily through access to basic services such as water, electricity, and sanitation – income poverty remains a major challenge, the department said.

It cited recent figures from the NIDS-CRAM survey which shows that 20% of households experienced hunger in the last quarter of 2020.

Gini coefficient and structural challenges

Despite the National Development Plan setting a goal of reducing inequality by 2030 from a Gini coefficient of 0.69 to 0.6, South Africa still holds the unenviable position of being one of the most unequal countries in the world, the department said.

The Gini coefficient is one of the most common measures of economic inequality with values between 0 to 1, where 0 indicates a perfectly equal distribution.

Current Statistic South Africa estimates put this number somewhere between 0.65 and 0.68, although the Covid-19 lockdown has not been fully factored into these calculations.

To a large degree, access to grants has improved income inequality. However, wage and wealth inequality remain significant challenges, the department said.

“The number of workers with highly skilled jobs is low, while a large proportion of the working population is employed in very low paid jobs. For instance, top-end jobs earn nearly five times the average wage for low-skill jobs yet represent less than 20% of the total working population.”

Among the major causes of poverty and inequality in the country is a lack of, or low earned income, the department said.

“Essentially, unemployment remains a structural feature of the South African economy and employment creation has not transpired at the anticipated rate. The nature of the labour market is that where there is growth in jobs, these are typically in fields requiring higher skills levels.”

The department said that was partly the fault of failures in the basic education system and limited access to further education opportunities ensure that many people remain at the lower end of the skills spectrum, struggling to find work.

“Latest unemployment figures show that unemployment has deepened further to 42.6% in the final quarter of 2020. Although these figures are affected by Covid-19 and the related economic effects, structural unemployment has been a longstanding issue in the country, affecting millions of families.”

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