SA income inequality narrows – analyst

2012-02-13 10:39

South African incomes have risen, while income inequality has narrowed over the past decade, a labour analyst said.

“After-inflation incomes have risen sharply, from R44 431 a year in 2000 to R61 645 in 2011 – a real increase of 39%, or a respectable 3.3% a year,” Adcorp labour economist Loane Sharp said in a statement.

In the past decade, income inequality between the races, especially between blacks and whites, had declined sharply, he said.

“In 2000, the average black South African earned 15% of the average white South African’s income, whereas in 2011, a typical black person earned 40% of a typical white person’s income.”

About 14% of the black workforce – or 1.3 million people – earn as much or more than the average white employee.

This was up from 270 000 in 2000 – an increase of more than a million, or 378%, Sharp said.

“Over the past decade, government employment has increased from one million to 1.24 million, and the proportion of blacks in the civil service has increased from 42% to 74%.

“As a result, nearly 40% of South Africa’s highest-earning blacks are employees of the South African government.”

He said 70% of the public sector work?force belonged to a trade union, which had played a role in the increased wage levels.

In the private sector, around 26% of the workforce was unionised.

Sharp said, however, a more significant reason for the steep increase in black civil servants’ incomes had to do with “managerial bloat”.

“Officially, government wages have increased by just 5.4% a year, but the government has utilised the twin mechanisms of promotion and job re-grading (which are not subject to public sector wage agreements) to increase the income of black civil servants,” he said.

The average remuneration for public sector workers was now 32% higher than that of private sector workers.

Sharp said the compensation of employees represented nearly 90% of total government spending.

“Nonetheless, three in five of South Africa’s highest-earning blacks are employed in the private sector – numbering around 820 000 at present.”

Sharp said if the historical rate of progression was maintained, there would be 5.1 million blacks earning more than the average white in the private sector by 2020.

“At this rate, the income gap will close in less than 10 years: the average white person’s income is currently rising by 5.3% a year, whereas the average black person’s income is rising by 14.9%.”

Sharp said government policies could be holding black incomes back. This included poor standard of education at public schools.

“The implication is that government policies, notably secondary schooling, restrictive labour laws and immigration controls, have been holding black incomes back.

“Without these counterproductive policies, blacks’ incomes would probably be rising even faster relative to whites’, and the income gap would be falling even faster,” Sharp said.

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