Despite an increase in the number of people in South Africa’s middle class, its share of the country’s income has declined, according to a new study.
Research compiled by Justin Visagie offers two perspectives on the distribution of wealth amongst the classes in South Africa between the start of democracy in 1993 and 2008.
While data from three “nationally representative” household income surveys compiled over the years shows that the middle class in South Africa has grown – the distribution of the country’s wealth is more concentrated amongst upper class households.
Rise of the middle class
Middle class families are defined as households that earn between R5,600 and R40,000 a month for a family of four (2008 prices).
This determined by looking at households that fall within 50% to 150% of the median per capita household income.
The number of people living below the poverty line (less than R515 per month) in SA decreased between 1993 and 2008 – from 56.9% to 51.7%.
This bracket of the population had increased its share of the total population from 19.3% in 1993 to 21.3% in 2008. The small margin of growth was due to the numbers growing only slightly above the population growth rate.
In contrast, however, the upper class of South Africa bolstered its numbers over the years more significantly – increasing from 1.1% of the population in 1993 (400,000), to 2.8% of the population in 2008 (1.4 million).
When it comes to the distribution of wealth amongst the classes, however, Visagie’s research highlighted a decrease of wealth amongst the middle and lower classes, and a sharp increase of total wealth amongst the upper class.
“Despite the increase in the number of people in the middle class, this class’s share of the country’s income declined from 56% in 1993 to 47% in 2007, compared to the increase from 17% to 32% for the upper class,” Visagie said.
“The middle class and lower classes together actually lost ground in terms of their combined income share, which decreased from 83% to 68%.”
“This pattern corresponds with the research on income inequality in South Africa, which consistently reports that income inequality has increased since 1994…Income has accumulated in the hands of those at the very top of the income ladder – while the middle and lower classes have lost ground.”
Changing racial landscape
Notably, the data shows a distinct change in the racial profile of the middle class in South Africa.
The number of black middle class families doubled between 1993 and 2008, while the number of white middle class families decreased over the period.
This shows that the middle class landscape has shifted from a white majority in 1993 to a black majority in 2008 – heralding the “rise of the black middle class” in South Africa.
“Falling numbers of middle class whites are partly a function of the shrinking white population, also driven by high levels of white emigration particularly between 1993 and 2000. ”
“However, a small but notable number of whites have also moved into the upper class,” Visagie said.
Justin Visagie is director of economic planning and research at the Eastern Cape Department of Economic Development, Environmental Affairs and Tourism.