Less than a third of middle-class South Africans (30%) are positive about the future of South Africa, while 27% say that they are likely to emigrate within the next five years.
These are some of the major findings in the latest BrandMapp survey – a dataset that uses a mega-sample of more than 30,000 South African respondents to profile the 12 million adults who live in mid-to top-income households earning in excess of R10,000 per month.
While the findings should be understood in the context of the Covid-19 pandemic, it is the latest dataset that points to a shrinking middle-class in South Africa as a stagnating economy and multiple lockdowns take thier toll.
Data published at the end of 2020 by the University of Cape Town Liberty Institute shows that South Africa’s shrinking middle-class has been years in the making, declining from 6.1 million to 2.7 million individuals between 2017 and June 2020, translating to a 55.73% reduction.
On the other end of the spectrum, the number of ultra-poor individuals, earning below minimum wage, increased by 6.6 million individuals (54%).
Analysts and investors have repeatedly warned that the Covid-19 pandemic and repeated lockdowns will also have a disproportionate impact on the middle-class.
Financial services company Transaction Capital said that as much as a third of South Africa’s middle-class could be wiped out due to the various lockdowns.
Citing credit statistics, wage data and unemployment figures, the group said that overdue debt balances continue to increase, with a R33 billion increase seen in 2020 alone. It said that around 38% of loans are not in good standing.
This is combined with the highest unemployment rate in 12 years at 32.5%, deteriorating monthly income, and below-inflation increase. As such, more than a third (34%) of households in South Africa are forecast to fall out of the middle-class, it said.
This is further emphasised by wage data, with fewer South Africans reporting income in the R22,000+ wage range, while significantly more South Africans are seeing incomes of less than R8,000.
The number of people in debt who are relying on their credit to stay alive has sky-rocketed, leaving the South African economy teetering on the edge of borrowed time, said Hans Overbeek, founder and chief executive of Cyber Finance.
While the impact is being felt by all sectors and groups, Overbeek said that middle-class families are falling increasingly behind.
“Many permanently employed workers have had to transition to contractual or informal employment, as businesses try and mitigate their own losses,” he said.
“Households below the poverty line have increased dramatically, while an estimated 34% of middle-class families are estimated to fall into vulnerability.”