How much you need to earn to be ‘middle class’ in South Africa
The University of Cape Town’s Liberty Institute of Strategic Marketing has published its latest research on the black middle class in South Africa, defining what it takes to be considered middle class in the country.
In 2012, the black middle class in the country saw significant growth, with the UCT researchers indicating that it had outpaced the white middle class for the first time. The latest report reflects on its significant and continued rise.
The researchers noted that South Africa has high inequality levels, “so it is difficult to contemplate what barriers define the black middle class” – however, the research suggests that this group constitutes approximately 3.4 million people, making up 7% of South Africa’s black African population – with a spending power of R400 billion per year.
The researchers said this group is split between lower middle class, middle class and upper middle class. The lower and higher middle class is differentiated by the lack of government support required.
The group defines the middle class in South Africa as households with an income of R22,000 per month and above.
Despite low economic growth, the number of high-earning taxpayers in the black middle class has grown from 1.02 million in 2017 to 1.28 million in 2019, the researchers said.
The key driver behind the research was to assess the contradiction in various reports of the middle class in South Africa both struggling and thriving in different contexts. The black middle class, in particular, is not afforded nuance within this narrative, the researchers said.
The group found that there has been a “maturation” of the black middle class over the last 15 years – with a new concerted focus on creating generational wealth.
There is now access to better education and the benefit of a long time spent in the middle class, which has strengthened financial decision-making and created a stronger long-term financial outlook.
“We are now seeing more and more second-generation black middle class families emerging, more children are being born middle class. So, the parenting experience is also different. There are also changes in identity,” the researchers said.
“The term used 10 years ago to characterise the spending power and habits of this then emerging class, was ‘asset catch-up’ – built on a notion that once financially resourced, black South Africans in post-Apartheid South Africa still needed to buy the car or house as they didn’t have the privilege of inheriting assets as did their white counterparts.
“That narrative has now shifted to wanting to create generational wealth – which wasn’t seen 10 to 15 years ago,” they said.
Travel wasn’t a strong part of the narrative 10 to 15 years ago either, but the researchers said this was increasingly noticed as a feature where this segment was using their spending power.
Education – particularly tertiary education – was also noted as a catalyst for enhanced economic outcomes in the black middle class.
“The correlation between economic outcomes and education is very strong (in terms of breaking into black middle class). Completing a tertiary qualification enhances outcomes significantly. There will always be unemployed university graduates, but as a proportion of the unemployed, they are relatively small.”
Looking ahead, the study’s researchers said they see the continued growth of the black middle class, with them not only growing in confidence but also owning their own narrative far more.
“In the next 20 years we’re going to be seeing the first major wave of black middle class retiring. What this will look like is still open to interpretation as research into black middle class retirement is still limited.”
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