According to theWorld Bank, South Africa is the mosteconomically unequal country in the world.[1] The difference between thewealthy and thepoor in South Africa has been increasing steadily since the end ofapartheid in 1994, and thisinequality is closely linked to racial divisions in society. The reason for South Africa's economic inequality being closely linked to racial divisions is due to historic systems of racial hierarchy. The system of Apartheid that existed in South Africa prior to 1994 concentrated power in the hand of the white minority who used this power to deny economic opportunity to the black majority. For example, the Apartheid regime barred Blacks from working and living in cities in order to keep them out of skilled labour positions. This ban was only lifted in 1973 due to shortages of workers in the manufacturing sector.[2] This system of denying Blacks economic opportunity resulted in significant economic inequality that persists to the present day and can be seen in all sectors including land ownership, educational opportunities, recreational spaces, housing and jobs.[3]
South Africa'sGini coefficient has remained high since 1982 and has proven to be noticeably higher than countries with similar characteristics. For example, South Africa has a Gini coefficient of 63 (highest), theUnited States is at 41.5, andUkraine stands with a score of 25 (lowest).[4] AlthoughBrazil and South Africa are often placed in the same category in terms of wealth and income inequality, Brazil has seen more positive results in recent years. In Brazil's case, its Gini coefficient decreased from 59.3 in 2001 to 53.1 in 2011; this is double the rate of South Africa.[5]
The top 20% of the population in most countries holds amedian of 47% of the income, whereas in South Africa, the top 20% of the population holds nearly 70% of the income. The remainder is mostly made up of themiddle class, and collectively, both the top 20% and the middle class leave less than 5% of the income for thebottom 20% of the population.[6]
South Africa governs adual economy. One part of the country is structured around an advancedcapitalisteconomy. The other "dual" or divided aspect of the country regards the structure as consistent with an underdeveloped country, mostly pertaining to the black population. In South Africa, this idea is known as the first (capitalist, high-profit industries) and second (underdeveloped) economies.[7] The first economy contributes to the majority of South Africa's wealth and is integrated within theworld economy. The second economy consists of low-skilled and outdated jobs. There is little connection between these two economies, as it complies with the most simple form of the dual economy definition, which is to be divided. This disconnection refers to an economic division and contributes to asocial division. The second economy does not contribute to economics on a global scale and serves the purpose of offering growingly low-paying jobs.[8]
Historically, South Africa has relied heavily on itsmining andagricultural industries, butglobalization has altered this. Now, the mining and agriculture industries have been labeled as part of the second economy of South Africa.[citation needed] The mining and agriculture industries have been left behind with the modern wave of advanced technology,global trade, and thefinancial sector of South Africa. As the capitalist financial sector in South Africa has established an important role on a global scale, it has grown since apartheid. At the same time, the second economy industries have fallen, along with much of the black population that made up the declining industries. According to theDepartment of Statistics of South Africa (Stats SA), theunemployment rate stood at 29.1% in the 2019 survey. Between Q2 and Q3 in 2019, the number of unemployed persons increased as the agriculture and mining industries reported 38,000 unemployed.[9] As the number of unemployed persons has increased (expected to be higher after the analysis ofCOVID-19's effect) in the second economy industries, the first economy has seen positive charts, instead of negative. In a different quarterly analysis in 2019 (quarter 4), Stats SA reported that South Africa's non-agricultural sector added 16,000 jobs, which increased the number of persons employed in the formal non-agricultural sector up to 10.2 million. In this same quarter 4 of 2019 analysis, the trend continued to be positive for the trade industries, adding 29,000 additional jobs. The business service industry reported 12,000 additional jobs as well.[10]
The black population stands at 80.6% of the population, theColoured category makes up 8.8%, the whites make up 8.1%, andAsians includingIndians make up 2.5%. Data made available byCNN presented that white South Africans earn nearly three times the average wage made by black South Africans, who take up the overwhelming majority of the workforce population.[11] Data shows that the widening andintergenerational gap is disproportionately affecting the black South Africans. TheWorld Bank estimates that South Africa would need to double the number of jobs created every year to see a significant reduction. The service sector dominates thehomogenous workforce, and the low-skilled manufacturing or agricultural jobs are declining. South Africa is on track to produce a morepolarized country in multiple categories, leaving the lower income classes with less opportunity to grow and a lack of exposure toeducation or other ingredients for growth across generations.[12]
The chart below, conducted by Stats SA, measures thelabor market trends between the black and white population groups in South Africa:[13]
Black African:
| Year | Not economically active | Employed | Unemployed | Unemployment rate |
|---|---|---|---|---|
| 2011 | 46.8 | 38.0 | 15.2 | 28.6 |
| 2012 | 46.2 | 38.6 | 15.3 | 28.3 |
| 2013 | 45.5 | 29.3 | 15.2 | 27.9 |
| 2014 | 45.1 | 39.5 | 15.5 | 28.1 |
| 2015 | 43.2 | 40.6 | 16.2 | 28.5 |
| 2016 | 42.8 | 40.0 | 17.3 | 30.2 |
| 2017 | 41.6 | 40.3 | 18.1 | 31.0 |
White:
| Year | Not economically active | Employed | Unemployed | Unemployment rate |
|---|---|---|---|---|
| 2011 | 31.6 | 64.4 | 4.0 | 5.8 |
| 2012 | 32.3 | 63.8 | 3.9 | 5.8 |
| 2013 | 31.8 | 63.6 | 4.6 | 6.8 |
| 2014 | 32.4 | 62.6 | 5.0 | 7.4 |
| 2015 | 31.7 | 63.7 | 4.6 | 6.8 |
| 2016 | 32.3 | 63.0 | 4.7 | 6.9 |
| 2017 | 31.7 | 63.7 | 4.5 | 6.7 |