Section 5
Contents
Income inequalities
Expenditure patterns
Comparisons between 1990 and 1995
Conclusions
References
Summary and conclusions
This study has demonstrated that income
distribution in South Africa is highly unequal, and that this inequality is vividly
reflected in household expenditure patterns.
Income
inequalities
Incomes in South Africa are unevenly
distributed by race and gender, by urban and non-urban areas of residence, and by
province.
- African households have the lowest average
annual income in the country, followed by coloureds, Indians and then whites.
- Average annual household income varies, not
only by province, but also by urban and non-urban place of residence, type of dwelling in
which the household lives, household size, and by occupation and gender of the head of
household.
- As many as 23% of all African households fall
into the bottom income category or quintile, compared with 11% of coloured, and 1% of
Indian and white households.
- Female-headed households, 26% of which are in
the bottom income category, are generally less affluent than male-headed ones, of which
only 13% are in the bottom category.
- African, female-headed households are
generally poorer than African, male-headed ones, followed by coloured, female-headed, and
then coloured, male-headed households. White, male-headed households are the most affluent
in the country, with as many as 73% in the highest income quintile.
- South Africans living in households in
non-urban areas are likely to be poorer than South Africans living in households in urban
areas. Twenty-nine percent of non-urban households are found in the bottom income
category, compared with only 8% of urban households.
- A large proportion of non-urban,
female-headed households are amongst the poorest in the country, since 37% are in the
lowest, and 28% in the second lowest income quintiles.
- Urban, female-headed households are likely to
be more affluent than male-headed households in non-urban areas. Only 15% of urban,
female-headed households are in the bottom income quintile, as against 23% of non-urban,
male-headed households.
- While white households are the most affluent
group in the country, white, female-headed households in both urban and non-urban areas
are relatively poorer than male-headed ones. The incomes of white, male-headed households
are very similar in both urban and non-urban areas, since 73% of households in urban and
75% in non-urban areas are found in the highest income quintile.
- Incomes are unequally distributed by
province. Proportionately more of those living in the Eastern Cape and the Free State are
in the bottom income category. There are relatively few households in the bottom income
categories in the Western Cape or in Gauteng, which are the most urbanised provinces in
the country.
- Income distribution is most unequal in the
Free State, with as many as 60% of all female-headed, non-urban households falling into
the bottom income category, followed by the Eastern Cape, with more than half (53%) of all
female-headed, non-urban households falling into the bottom income category.
- Compared with households in the other
provinces, incomes in Mpumalanga households are the most evenly distributed, among both
male- and female-headed households in both urban and non-urban areas. A relatively large
proportion of households (28%) in this province are in the middle income quintile.
Expenditure
patterns
Expenditure patterns in South Africa show a
great deal of variation among households in the various quintiles.
- A large proportion of expenditure in the
average South African household (59%) is on four items food (18%), housing (16%),
income tax (15%) and transport (10%).
- Households in the bottom expenditure quintile
spend only 3% of total average annual expenditure in the country, while households in the
top expenditure quintile spend as much as 61%.
- Households in the bottom expenditure quintile
spend as much as 51% of their total annual average expenditure on food, while households
in the top quintile spend 12% of their total annual expenditure on food.
- The poorest households spend only 3% of their
total average annual expenditure on transport, while the most affluent spend 12%
(including the purchase of vehicles).
- Poorer households spend a relatively larger
proportion of their available money on fuel and power for heating and lighting, compared
to more affluent households.
- Poorer households spend very little on sport
and recreation, reading matter, restaurants and holidays, compared to more affluent
households.
- The average household spends 15% of total
annual expenditure on income tax, but households in the bottom quintile spend only 0,5% of
their total annual expenditure on income tax, compared with the 18% that households in the
top quintile spend.
- In general, a very small proportion of
earnings in South Africa goes towards savings, investments and insurance and pension
funds.
Since food expenditure forms such a high
proportion of the spending in poor households, we examined food expenditure in more
detail.
- Households in the bottom quintile spend just
over R2 000 per annum on food, compared with approximately R13 000 spent by
households in the top quintile.
- The poorest households spend more than a
third of their total food expenditure on grain products, while the more affluent spend
more than a third of their total food expenditure on meat and fish.
- Expenditure patterns in South Africa clearly
indicate the extent of inequalities that persist in the country.
Comparisons
between 1990 and 1995
- On average, when comparing 1990 and 1995, it
is noteworthy that there has been a substantial increase in the annual incomes of African,
coloured and Indian households in the 12 main urban centres.
- This increase is associated with spending
proportionately less on food, and proportionately more on housing and transport.
- Among African, coloured and Indian
households, income inequalities in the 12 main urban areas is increasing, while among
white households, it is decreasing.
Conclusions
The effects of past apartheid policies are
evident when examining the disparities in incomes. Africans generally, and non-urban
African women and men in particular, are the poorest groups in the country.
As the new government addresses the
inequalities of the past, it will be able to measure change in income distribution through
studies such as this one.
In particular, it will be able to monitor
income disparities between the poor and the more affluent in the 12 main urban areas in
the country. Indeed, this survey, on which weights for the CPI are based, can be used for
a variety of other purposes.
- It can be used as a base-line survey to
monitor changes in average incomes among different sub-groups of society over time.
- It can be used to monitor changes in income
distributions over time.
- It can be used to monitor changes in
proportions of expenditure on food and on other items over time.
- The proportion of income tax expenditure in
each quintile, as income distribution changes, can be monitored.
- It can monitor changes in savings patterns,
in relation to economic growth and changes in income distribution.
Monitoring of change in income distribution
has already been achieved in the 12 main urban areas over the time period between 1990 and
1995. In five years time, when the next income and expenditure survey is conducted,
it will be possible to examine change in income distribution throughout the country,
rather than only in 12 main urban areas.
References
Central Statistical Service, 1992. Survey
of household expenditure, 1990. (No.01-11-01 [1990]). Pretoria: CSS.
Hirschowitz, R and Orkin, M, 1996. Living
in South Africa. Selected findings of the 1995 October household survey. Pretoria:
Central Statistical Service.
Todaro, M.P, 1989. Economic development
in the third world. New York: Longman.
World Bank and SALDRU, 1995. Key
indicators of poverty in South Africa. Pretoria: Ministry of the Office of the
President.