SA must fight inequality – World Bank

2012-07-24 11:12

South Africa must tackle economic inequality to create jobs and bring down unemployment statistics, according to a World Bank report.

South Africa was one of the most unequal countries in the world, with a Gini coefficient of 0.7 in 2008, the bank said in its report, entitled South Africa Economic Update: Focus on Inequality of Opportunity.

The Gini coefficient is an internationally-used measure of inequality.

According to the report, the top 10% of South Africa’s population accounted for 58% of the country’s income.
The bottom 10% accounted for just 0.5% of income, and the bottom 50% for less than 8%.

“At the heart of high inequality lies the inability to create employment opportunities on a large enough scale,” the bank said in its report.

Unemployment of 25.2% (or 33% if discouraged workers were included) was among the world’s highest. Social grants made up 70% of the income of the poorest 20% of South Africans.

If these grants were excluded, the income of 40% of South Africans would have declined in the first decade after apartheid.

“Even after accounting for the equalising role of social assistance, income inequality remains extraordinarily high,” the bank said.

“To reduce it to more reasonable levels over the long run, social assistance is clearly not enough and needs to be complemented by other initiatives.”

South Africa should focus on human capital development, particularly among children and the youth.

Children should have the same opportunities, regardless of family circumstances, race, gender or location.

Access to a basic set of goods and services during childhood could be an important predictor of future outcomes, including educational achievements and earnings.

These basic services included education, health care, essential infrastructure such as water, sanitation and electricity, and early childhood development programmes.

Several factors affected access to these services in South Africa, including gender, ethnicity, household composition, the total number of children in the household, parents’ education, the gender and age of the household head, orphan status, and location of the household.

There was near universal access to schooling for children under the age of 16, as well as telecommunications.

However, access to other services was below 60%, including health insurance, a safe water supply, improved sanitation, and adequate space without overcrowding.

Fewer than 60% of children finished primary school.

Other opportunities, such as access to early childhood development programmes, safety in the neighbourhood and electricity, carried low to moderate inequality.

South Africa fared well on school attendance when compared to other countries, but ranked below them for the number of children completing primary school on time, and access to water, sanitation and electricity.

“Trends suggest improvements, but the gaps with other countries are generally not closing,” the bank said.

Children’s inequality was shaped by circumstance.

Children living in townships, informal settlements or rural areas, as well as parents’ education, contributed the most to inequality.

Race- and gender-based disparities were not the most important factors in determining inequality.

South Africa’s near universal access to primary education was a necessary first step for equalising opportunities among children.

Access to telecommunications and electricity had also improved.

Water and sanitation access still presented a challenge.

South Africa needed to give children the opportunity to finish primary school on time. T

hey should be exposed to early childhood development programmes, and physical safety needs to be improved.

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