This is how many people in South Africa earn more than R42,000 a month

 ·12 Aug 2022

New data from the Bureau of Market Research (BMR) reveals that the personal income divide between South Africans is continuing to grow, with no sign of improvement.

Jacolize Meiring, the head of household wealth research at BMR, said 75% of the employed adult population currently earn below R5,800 per month – making up only 11% of personal income.

This is in contrast to 3.8% of the population that earns more than R48,000 per month, accounting for just below 50% of personal incomes in the country, she said.

Tax statistics published by the South African Revenue Service for the 2020/21 tax year show that approximately 1 million people in South Africa (6.7% of the working population) earn a taxable income higher than R500,000, or R42,000 a month.

Around 462,000 people (2.9%) earn more than R750,000 or R63,000 a month, and 1.6%, or 242,000 people earn more than a million a year (R83,300 a month).

In stark contrast to this, data published by the Pietermaritzburg Economic Justice & Dignity Group (PMBEJD) shows that 30.4 million people – 55.5% of the total population – live below the upper-bound poverty line of R1,335 a month, and a quarter (13.8 million people) live below the food poverty line of R624 a month.

Speaking to 702, Meiring said that this illustrates a deep divide in South Africa, reaffirming the World Bank’s determination that South Africa has the highest level of income inequality in the world.

The divide has been around since before the Covid outbreak in 2019/20 but has been exacerbated by recent economic events of the past two years, Meiring said.

Over the past 11 years, personal income estimates have remained skewed with vast disparities between South Africans, reported the BMR.

People who earn below R5,800 per month are living hand to mouth, barely able to make contributions to savings, and are likely to go into debt, said Meiring.

She added that in terms of consumer finances, they are not performing optimally. The two main drivers of inflation – namely, food and fuel, which contributes to transport costs – continue to take their toll on the wallets of average consumers, making saving money and servicing debt more challenging.

The country is unique compared to other developing countries in that many of its constraints to economic growth are structural – such as load shedding, industrial action and political instability, said Meiring. Being an open economy, South Africa is also exposed to what happens globally, such as the war in Ukraine.

Regarding the BMR’s outlook for the rest of 2022, Meiring said that the group does not expect the economic situation to change and is likely to remain quite volatile.

The BMR’s latest Consumer Volatility Index (CVI), which surveyed several key informants in the banking and financial services industries, projects the following for the third quarter of the year:

  • Consumer price inflation to increase rapidly;
  • Unemployment is expected to increase;
  • The South African and global economies are expected to perform worse;
  • The state of consumer finances is expected to deteriorate;
  • Consumers are expected to feel even less in control of their finances.;
  • Post-Covid recovery is expected to drag, taking more than another year for consumer finances to recover.

Meiring said the economic recovery from recent financial shocks would likely be slow, with the CVI expecting consumers to take an additional 18 months to recover to get over the shocks of the past two years.

Speaking to SABC News, Meiring said to best tackle the issue of personal income in the country, government redistribution efforts and grants can be implemented in conjunction with:

  • Taking the money coming from the small tax base and using it more efficiently;
  • Empowering people with the ability to make good and sound financial decisions even when people have little income and;
  • Giving South Africans the environment to earn an income.

Mering added that companies that are well established could take it upon themselves to assist startups. To ease the starting of a business in the country, the government should remove a lot of red tape.

“We basically see that there’s various pressure on the consumer that’s outside their control. The rising inflation originates from structural imbalances, originating from imported products, and the impact of local political pressures. The electricity supply constraints, poor service delivery, the recent flooding that we just had, all that adds pressure to consumers’ finances,” said Meiring.

Read: Big petrol price cut building in South Africa for September: economist

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