Report highlight growing inequality within Black group

With their flashing high flying lifestyles, that have been so prominently in the spotlight off late, the African National Congress (ANC) alliance’s governing elite and its phalanx of bureaucraticly deployed cadres might be creating an explosive powder keg. That is one of the underlying implications of the findings of a just release international report on poverty and income inequality in South Africa indicating that while the country, a decade an a half after the advent of democracy,  remains one of the most unequal societies in the world.

The report, produced by the Organisation for Economic Cooperation and Development (OECD), is based on statistics available up until 2008. Amongst others it found that the aggregate levels of income inequality and income poverty within the black (African) section of the community increased most in the period between 1993 and 2008.

It found that more than half of all South Africans (54%) are poor, but among children below 10, as many as two out of three are poor. “This implies that among all poor South Africans, one in three is a child,” a statement at the time of the report’s release states.

One of the key conclusions of the report is that “intra-African (black) inequality and poverty trends increasingly dominate aggregate inequality and poverty in South Africa. Race-based redistribution may therefore become less effective over time relative it policies addressing increasing inequality within the each racial group and especially within the African group.”

The report in its introduction states that “while between-race inequality remains high and is falling only slowly, it is the increase in intra-race inequality which is preventing the aggregate measures from declining. Therefore, policy initiatives which address the increase in intra-racial inequality are recommended, rather than those focused solely on redistribution between inter-racial population groups.”

Among the key findings in the report are:

·         South Africa’s high aggregate levels of income inequality and income poverty did not decrease between 1993 and 2008. According to some estimates, aggregate inequality even slightly increased. Income inequality in South Africa now is at a significantly higher level than Brazil, one of the former “international world champions;”

·         Inequality between racial groups decreased, especially during the 1990s. This did, however, not lead to a decrease in the aggregate because inequality within population groups increased, especially among Africans; and

·         Poverty has increased, especially in urban areas. On the other hand, there have been continuous improvements in non-monetary well-being, like access to piped water, electricity and formal housing, over the entire post-apartheid period up to 2008.

The report also comes to the conclusion that rising inequality within the labour market – higher unemployment and greater wage inequality – lies behind the increased levels of aggregate inequality. These labour market trends have prevented work from playing a more positive role in reducing poverty.

On the positive side the report also found that social assistance grants – the child support grant, the disability grant and especially the extension of old-age pension – have been crucial in reducing poverty among the poorest households, although it altered the levels of inequality only marginally. It also highlights the fact that there is still a large number of families that are ineligible for grants simply because of the lack of appropriate documents.

The report, however also warns against arguments that social grants should be extended to focus directly on the unemployed. “While economic growth has supported the sustainability of the growth of the grants system so far, it is questionable whether a permanent income support of the unemployed would lead to the desired outcomes.

“Many of the unemployed are young school leavers and while they clearly need some sort of social safety net or temporary social insurance, the longer term goals of policy should be directed at helping this group enter the labour market and remain in work in the long-term,” the report states.