Can you live on R25 a day?

New data compiled by research firm Pew, shows that a majority of South Africans are living on less than R25 a day.

According to Pew Research Center, the majority of the world’s population (56%) continues to live a low-income existence, compared with just 13% that could be considered middle income.

The group did an analysis of the most recently available global income data for its findings.

In the 111 countries included in the study, 784 million people were categorized as middle income in 2011, compared with 399 million in 2001.

This shows that the global middle-income population nearly doubled, increasing by 385 million in the first decade of the new century.

The increase in the middle-income population from 2001 to 2011 was more than twice that for the upper-middle category (176 million), and more than four times the increase in the number of high-income people (88 million).

Global distribution
Global distribution of income

The income groups are defined as follows

Income level Living on, per day (USD) Living on, per day (ZAR) Monthly Net (ZAR)
Poor $2.00 or less R25 or less R750 or less
Low income $2.01 to $10.00 R25 to R125 R751 to R3 750
Middle income $10.01 to $20.00 R125 to R250 R3 751 to R7 500
Upper-middle income $20.01 to $50.00 R250 to R620 R7 501 to R18 600
High income $50.01 or more R620 or more R18 601 or more

The figures above are expressed in 2011 purchasing power parities in 2011 prices, Pew noted.

“The $2 poverty line used in this study anticipates that the World Bank’s global standard for extreme poverty, now at $1.25, will move close to $2 when it incorporates 2011 purchasing power parities, rather than the 2005 PPP currently in use,” Pew said.

“More concretely, a poverty line of $2 approximates the ground reality in India. The official poverty line in India currently is about $1.90,” it said.

A drop in poverty
A drop in poverty

Looking specifically at South Africa, the majority of people in the country are considered low-income, with 52.7% of the population falling into that bracket.

13.6% of the South African population form part of the middle-income bracket, while 9.4% are upper-middle income.

Only 4.1% of the population are considered high-income – compared to the 20.2% of the population that are considered poor.

South Africa income levels

Income level 2001 2011 Change
Poor 32.7% 20.2% -12.5%
Low-income 49.4% 52.7% +3.3%
Total low-income 82.1% 72.9% -9.2%
Middle income 10.8% 13.6% +2.8%
Upper-middle income 5.9% 9.4% +3.5%
High income 1.1% 4.1% +3.0%

Overall 73% of the people in South Africa are classified as low-income or poor.

While the figures show that South Africa is still overwhelmingly a low-income country, the figures have improved significantly in the decade between the two data points.

In 2001, 82.1% of the country’s citizens were classified as low-income or poor.

Between 2001 and 2011, the level of ‘poor’ people decreased by 12.5%, while all other groups increased between 2.8% and 3.5%.

Read: How rich are you really?

What middle class means

Countries living in poverty
Countries living in poverty

“Living on $10 a day may not sound like a middle-income existence to someone in the US, Germany or Taiwan, but the notion that an individual is on a firm enough footing to not worry about mere subsistence or falling back into extreme poverty is considered by many in business, political and economic circles to matter a great deal,” Pew said.

According to the firm, a more equal distribution of income may be associated with a bigger middle-income population.

The size of a country’s middle class thus depends, in part, on the extent of inequality, it said.

However, for studies of inequality, the central concern is to compare the incomes of different groups and how their relative incomes change over time. The data presented here does not measure this, as the thresholds are fixed.

“The middle-income population changes as more or fewer people live within this budget.

Note, however, that the average income of this group does not change much over time because it always only includes people living on $10 to $20 daily, Pew said.

 

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Can you live on R25 a day?