At the dawn of our democracy in 1994 income levels was mostly split between the races. White South Africans were earning considerably more than than their counterparts of other races.
This income inequality was a direct result of Apartheid policies which sought to suppress the income potential of black South Africans by denying them access to higher paying jobs and higher levels of education.
During the Rivonia trail former president Mandela said: “The complaint of Africans, however, is not only that they are poor and the whites are rich, but that the laws which are made by the whites are designed to preserve this situation.”
He goes further and explains how this situation can be rectified: “There are two ways to break out of poverty. The first is by formal education, and the second is by the worker acquiring a greater skill at his work and thus higher wages. As far as Africans are concerned, both these avenues of advancement are deliberately curtailed by legislation.”
It has now been more than a quarter of century since these laws have been repealed and indeed considerable inroads have been made alleviation of poverty amongst black South Africans. But we have not nearly reached the point where each South African can earn a decent living.
Politicians like to ascribe this situation to the historical income inequality between races during apartheid. Whilst the effects of apartheid policies are felt even today our problem is not one of unequal distribution of income amongst races. Our problem is insufficient income.
MYTH: INCOME INEQUALITY IS A RACE ISSUE
2015 “Living Conditions of Households in South Africa” by Stats SA shows that 74.87% of whites are in the top 20% of income earners compared to 43.92% Indian, 20.9% Coloured and 12.39% Black.
23.81% of black South Africans are in the bottom 20% compared to 9.63% Coloured, 1.99% Indian and 1.1% White.
Can we conclude from the above that income inequality is between black and white? Not at all.
We merely see that whites tend to be in the top 20%. Given that they are only 9% of the population they simply can not be the whole 20%.
We also see that 25% of whites are not in the top 20% and earn less than R 6000pm.
To determine which percentage of the top 20% of income earners are white we can combine the fact that 74.87% of whites are in the 20% with the fact that whites are around 9% of the population.
In other words. Whites are 9% percent of the population and 74.87% of that 9% is in the top 20%. That is 6.7%.
Using the current legal definition of black (which strangely looks like apartheidheid’s ‘non european’) we can now say the number of black earners in the top 20% equals 20% – 6.7% which is 13.3%.
Black South Africans are thus 66,5% of the top 20%.
The Facts:
- One out of four white South Africans are not in the top 20%
- Black South Africans outnumber white South Africans in the top 20% by a factor of 2 to 1.
- Income equality is clearly not a white and black issue.
MYTH: REDISTRIBUTION OF INCOME WILL SOLVE OUR ECONOMIC PROBLEMS
According to 2017 World Bank data South Africa’s GDP per capita is 6,160 USD per year.
The GDP per capita shows the total value produced per person for the year. It does not tell us which part is available as income.
If we however use the whole amount as income we can see the truth.
6,160 USD per year is equal to R 7 500 pm. If we distribute the income equally can we assume that everyone will work for R 7 500pm?
Will we have any doctors, engineers, accountants, technicians etc in our economy?
The good news is that we will also not have politicians since they are used to around R 100 000 pm.
The facts:
- A redistribution of income will not solve our problems
- A perfect distribution of income will collapse our economy.
- To solve our problem we need to grow our economy and produce more income.
MYTH: BLACK EMPOWERMENT AND EMPLOYMENT EQUITY ARE THE DRIVERS FOR CHANGE IN INCOME EQUALITY BETWEEN RACES
In 1994 our GDP was 139 billion USD per year.
BEE and EE supposes that a share of the 139 billion be allocated to black South Africans.
The story that BEE and EE is behind the progress that black South Africans have made is a blatant lie.
By 2014 our GDP had more than doubled to 350 billion USD.
It is an obvious fallacy to say that white South Africans have increased their productivity by 150% and then gave a share to black South Africans via BEE and EE.
The Facts:
- BEE and EE did not uplift black South Africans. They are now contributing to the economy they have been excluded from and are uplifting themselves.
- The only way to solve our income inequality problem is to grow the economy and get more South Africans working.
The problem is not so much only the racial discrimination these myths attempt to ratify. The bigger problem is that the policies build on these myths serve to undermine the very segment of the population it purports to uplift.
“The policy entrenches the country’s shocking economic inequalities by creating a culture of cronyism and entitlement that discourages black entrepreneurship and education, keeping millions in poverty.” Moeletsi Mbeki – Economist
Gideon Brits
