We must claim victory, but also admit defeat

2011-10-29 07:43

I’ve always identified myself as a working class person, despite recent evidence to the contrary, until I came across a revolutionary piece of research from the futurefact survey 2011.

A class of us who came of age just as freedom hit our shores has been incredibly lucky. We have moved up a class ranking or two from that of our parents, largely because of employment equity policies enshrined in the Constitution.

With the doors of opportunity thrown open, the ANC has governed over a period of substantial class mobility.

“South Africa is arguably one of the most socially mobile societies in the world,” says Jos Kuper, the head of Kuper Research which undertakes the yearly futurefact survey.

I, for example, am the child of clothing workers. Like many parents, mine scrimped, saved and borrowed to put their three kids through university.

By the time I qualified, the ANC was ending its long walk to freedom and starting negotiations for a future state. One of the clauses the party successfully negotiated as a make-right was employment equity.

With this policy context, the path to opportunity was created for new young graduates. When I became an editor several years ago, it was the happy outcome of an affirmative action appointment.

This new class – a black middle class that has amassed substantial wealth – is a symbol of successful transformation. Yet the narrative is that there has been little change. Blacks are poor. Whites rich. Nothing has changed. Thus the march for economic freedom resonated this week.

That it resonated is a good thing since the levels of need, of poverty and unemployment are so grindingly deep and heart-breakingly impenetrable.

But it is worth looking at the value of new wealth and the patterns of social mobility to understand how to grow the size of the cake. And for a nation that can be more downbeat on ourselves than we should be, we should claim the creation of a middle class as a sweet outcome of freedom.

In India and Brazil, similar countries to ours, they have claimed as victories this mobility. It is a kudo to yank people up from poverty into the working class and then into the middle class. Why don’t we? I set out to find out.

The Unilever Institute at UCT has done a series of studies on the black-diamond market. The term is contested, but the research is important. It defines a black middle class as the average reader of City Press, people who earn more than R6?000 a month, are educated, and who are
influential members of your community and of society at large.

The 2008 study, the latest, shows there are an estimated three million black middle class people, though the numbers may be down after the effects of the recession.

The growth tallies with the levels of mobility found in futurefact. The authors found class growth of 15% in a year.

“Growth has continued despite lower economic growth and general economic downturn,” say Kulsoem Roode and Nandi Kona of the Unilever Institute. Spending power is significant. The authors placed this spending power at R250?billion in 2008.

“Black diamond spending now equals that of white spending,” say the authors. Black people with means are amassing wealth and saving substantially.

In a recent study, economist Mike Schussler found that blacks now own 27% of all assets. Property has been the most popular form of asset accumulation.

As a kid who moved continuously with my parents from rental to rental as we dodged the Group Areas Act, I understand this. Almost as soon as I could afford a mortgage bond, I entered the property market.

It was, I realise with the benefit of hindsight, a way of finally rooting in my own land. Black South Africans now own 41.7% of South Africa’s primary residential market, 36 times the number who own shares. But white wealth is still much larger because of apartheid’s grip.

White people have earned wealth inter-generationally for hundreds of years. The first substantial generation of black middle-class people has not had much time.

Thus, the net asset value per population group is still skewed, though the overall numbers suggest that good transformative policy-making by government has created wealth and assets.

This fact is sadly overlooked too often as it is politically easier to mobilise as if nothing has changed. It is more clever to claim the gains and build on them.

At the JSE on Thursday afternoon, the path to walk to equality was stark. Young ANC Youth League marchers rested in the ample shade of capital’s steel and glass structures.

HSBC, Deutsche Bank, the JSE and other signs hulked over the hungry and the unemployed who sat dog-tired on the tar made hot by a heat-wave. The march was symbolic for many reasons – it was the perfect depiction of the Gini coefficient, the measure of the wealth gap.

Ours is the widest in the world and in this context it is hard to claim credit for a relatively small black middle class. In Sandton, the number of black executives and buppies who joined the march was a tiny dot in a mass of largely unemployed youth.

We should all be asking ourselves how youth, who should be working or studying or tapping into opportunity of some sort, were able to spend a day and much of a night marching?

In class terms they would be classified a lumpenproletariat – an underclass without a way in. The figures suggest there are three million unemployed and largely unemployable youth.

This week, they became the Juju army, confirmed foot soldiers of ANC Youth League president Julius Malema, the only politician who makes an emotional rather than a technocratic connection with them.

So, while the symbolism of the JSE was evocative in exposing the naked exclusion of the marchers, let’s take a closer look at who owns the wealth of the exchange.

A study of the JSE carried out by Trevor Chandler and Associates and released last month found that at least 17% of the country’s wealth, as measured by listed wealth on the bourse, is black-owned.

It is the most exhaustive study of individual black wealth ever, and involved tracing 12 million ownership records. The black ownership figure is possibly an under-estimate as Chandler and his analysts must still comb through 32% of shares which haven’t been analysed.

This does not mean that 83% is white-owned as we erroneously reported a fortnight ago. In fact, the calculation is much more complex as our graph displays.

Once you strip out foreign ownership, state ownership, cross-holdings (the latter two characterised as benign), it may well transpire that the levels of individual black and white ownership are about equal.

“Whether the ownership figure is impressive or not depends on your view, but what’s noteworthy is that black South Africans now own at least 9% of the JSE’s total value through building up pension funds, life policies and investments in unit trusts,” says Michelle Joubert, the head of investor relations at the JSE.

“That means that 9% of the value is owned by people who have regular jobs, regular lives.” Eight percent is owned by individuals, some of whom have benefited from BEE deals. She adds: “The figure is another indication of the growth of South Africa’s black middle class.”

If you add in the state and its employees as black shareholders, the number is likely to be even more impressive and will show how the state as employer has substantially aided black advancement. 

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