How much money you need to be in the richest 1% in South Africa – and how you compare to others

The World Inequality Lab has updated its wealth database for South Africa and other nations in 2022 – and provides a tool that lets users calculate their wealth relative to others.

The database was constructed by an international network of more than 100 academics, including Thomas Piketty and Nobel Prize winner Abhijit Banerjee, making it possible to compare income inequality in 173 countries. The estimates are based on a mix of sources, including tax data, surveys, and other statistics.

The database also includes a simulator that allows you to compare your household income to other South Africans. You can access the tool here.

Earning the average formal sector salary in South Africa of R24,051 (QES, 3Q21) would put you in the richest 12% in the country, according to the simulator. The monthly salary you would need to be a top 1% earner, meanwhile, is around R151,451, the data shows.

You would need a net wealth of around R4.2 million to be considered a member of South Africa’s top 1% when considering total wealth, with the average net wealth of the one-percenters being closer to R22.6 million.

Growing inequality

The group’s data shows that after three decades of trade and financial globalisation, global inequalities remain extremely pronounced: they are about as great today as they were at the peak of Western imperialism in the early 20^th century.

In addition, the Covid pandemic has exacerbated global inequality. The group’s data shows that the top 1% took 38% of all additional wealth accumulated since the mid-1990s, with an acceleration from 2020. More generally speaking, wealth inequality remains at extreme levels in all regions and is most pronounced in Africa, it said.

“The Covid crisis has exacerbated inequalities between the very wealthy and the rest of the population. Yet, in rich countries, government intervention prevented a massive rise in poverty, this was not the case in poor countries. This shows the importance of social states in the fight against poverty,” said Lucas Chancel, lead author of the report.

The report shows that globally an average adult individual earned a purchasing power parity (PPP) of $23,380 per year in 2021 (R372,669), and the average adult owns $102,600 (R1.63 million).

However, these averages mask wide disparities both between and within countries, the group said. The richest 10% of the global population currently takes 52% of global income, whereas the poorest half of the population earns 8.5% of it.

On average, an individual from the top 10% of the global income distribution earns an average of $122,100 annually (R1.94 million), whereas an individual from the poorest half of the global income distribution earns $3,920 (R62,480).

“Global wealth inequalities are even more pronounced than income inequalities. The poorest half of the global population barely owns any wealth at all, possessing just 2% of the total,” the group said.

Conversely, the richest 10% of the global population own 76% of all wealth. On average, the poorest half of the population owns PPP $4,100 (R65,352), while the top 10% own $771,300 (R12.2 million) on average.

Read: 4 behavioural biases to avoid when investing: South Africa portfolio manager