Poor education and wealth disparity perpetuates inequality in SA

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 If you’re born into a lower-class family or if you’re born into poverty, the chances are that you’ll remain in that social class, say experts. Photo: iStock
If you’re born into a lower-class family or if you’re born into poverty, the chances are that you’ll remain in that social class, say experts. Photo: iStock

BUSINESS


Children born into poor families inherit poverty and pass it on from one generation to the next, as there are no mechanisms in place for them to escape the poverty cycle, experts have said.

This, they say, perpetuates poverty and inequality in the country, contributing to South Africa’s position as the most unequal society in the world.

Our country is ranked first out of 164 countries on the World Bank’s global poverty database. The report investigated levels of inequality in southern Africa, with a special focus on countries within the Southern African Customs Union (Sacu) – South Africa, Botswana, Eswatini, Namibia and Lesotho.

Inequality levels were high in Sacu member countries, but South Africa was the most unequal not only within Sacu, but also in the world.

Former Statistician-General and research associate at Oxford University Pali Lehohla says this can easily be measured through the Gini coefficient, which is used to measure levels of inequality, with one representing the highest of those levels. A coefficient of zero indicates a perfectly equal distribution of income or wealth in a country.

In 2006, inequality in South Africa was at its peak, at 0.72. While there have been attempts to improve the situation, they have not achieved much. By 2015, inequality had remained stubbornly high, at 0.68.

Lehohla says inequality and poverty levels in South Africa are worsening.

He says:

It’s going backwards, at 0.72, as a consequence of many things that have happened. The rampant corruption, the Covid-19 pandemic, and the recent fires and floods are likely to push that Gini ranking upwards, so we still get the Oscar award for being the most unequal society.

In his presentation at a Tshikululu Social Investment webinar on Wednesday, Lehohla said inequality and poverty levels in South Africa could be ascribed to the country’s history of racial segregation. The Gini coefficient recorded the highest level among black African people in the country, at 0.65. It stood at 0.58 among coloured people, 0.56 among Indian people and was lowest among white South Africans, at 0.51.

READ: Is the basic income grant a vote-grabber, and is it affordable?

Lehohla suggested that education outcomes, or the lack of proper education, played a big role in creating sustained inequities, with 45% of white people having received tertiary education, compared with 12% of black Africans.

He said that, in the 1970s, for every black person who graduated from university, there were 1.2 white graduates. More recently, however, for every black person who graduated, there were six white graduates. He added that the country was not investing wisely in education.

Said Lehohla:

The inequities in education are so serious that they create sustained inequities which breed other inequities. [By 2016], there were about 2 million people with a degree – and that’s too few to drive an economy such as South Africa’s … The investment in education for the majority of the population, which was 90% [if one adds coloured and white people], wasn’t yielding the results wanted. So, there aren’t more people who can pay tax, [which means] social grants won’t be available [when they reach] old age, and care won’t be available. It heralds a very sad situation for South Africa.

“Poverty is really driven by a lack of education. When you have [less] education, you’re likely to be poor. When you have higher education, your poverty levels are about 8.5%. You’re 10 times more likely to be poor if you don’t have an education than if you do. The educated are white and the uneducated are black, so they’re more likely to be the poor relative to their white counterparts.”

INHERITING POVERTY

Project officer at Oxfam SA Vuyokazi Futshani painted a frightening picture of inequality and poverty.

“[Regarding] wealth inequality, which is also one of the biggest drivers of inequality in this country, if you’re born into a lower-class family or if you’re born into poverty, the chances are that you’ll remain in that social class. Furthermore, that gets passed down from one generation to the next, so we see the inheritance of poverty and inequality throughout generations.

“That’s one of the things that’s made it so persistent. We need to further unpack the intersectionality of inequality in South Africa in order to really understand the scale [and size of] the problem,” she said.

Precious Zikhali, senior economist at the World Bank, agreed: “There are high structural inequalities of opportunities. The circumstances we inherit at birth, such as gender, race, location and our parents’ background continue to have a high and significant bearing on inequality.

She added:

It’s almost as if you lose the battle before you even begin it, because there are things you inherit that you can’t control, and that really continue to shape and perpetuate inequality.

Professor Imraan Valodia, director of the Southern Centre for Inequality Studies, said South Africa did not have the mechanism to allow a person from a poor family to move up the income hierarchy and change the pattern that shaped our society.

“We have too much concentration, which isn’t a good thing for an economy. When you have such a large concentration, you have an economy where power is concentrated among those who’ll stop others from getting access to wealth. We have to change the structures that keep the poor poor and the rich rich. So, at the top end, we have to think about policies that would keep wealth distribution as a broad-based system.

“BEE has changed patterns of wealth, but it’s also increased concentrations of wealth, so, at the top end, the race characteristics have changed, but that top end continues to be extremely small and it has vast amounts of wealth. We have to change that at the bottom end.

“A child who’s born today should have exactly the same opportunities as a child who’s born into a rich family,” he said.

READ: Building wealth for future generations

Zikhali said wealth inequality was high and resulted in inequality in both incomes and consumption.

Inequality in the distribution of wealth, he added, was an important factor to consider.

He added: 

If we take the top 1%, who have large amounts of wealth in South Africa, those are the really wealthy South Africans. On average, their net holding of wealth is about R17.8 million. If we look at the bottom half of all South African families, their wealth position is negative. They have minus R16 000, on average. What we have in South Africa isn’t the norm in the world. We have this massive concentration at the top end and then vast numbers of households in the country who have no wealth at all.

“The second thing is that, if we [want to know the] likely predictor for what the life of a child born today will be like, it depends almost entirely on what that child’s parents’ income and wealth are like.”

Futshani said that more than 55% of the population lived in poverty and more than 55% of that number were black women. She added that the country did not have adequate policies to directly address those who were most marginalised.

The panel that was part of the webinar conceded that government had made some progress in trying to address this issue.

“One of the ways in which government’s tried to tackle this is by high spending on transfers on social services. So those transfers and social services have gone a long way in terms of mitigating unequal outcomes,” said Zikhali.

Valodia said social grants played a vital role in shielding the poor to a certain extent from increased levels of inequality and poverty.


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