Section 2
Contents
Introduction Average annual household income in 1995 by race Income distribution Measures of income inequality Summary The main findings regarding incomes
It is well-known that incomes in South
Africa are unevenly distributed by race,[The
apartheid-based racial classification of South Africans as African, coloured, Indian and
white is retained in this report as a classification variable to enable the CSS to monitor
change in the life circumstances of those who were disadvantaged in the apartheid era.]
gender and urban/non-urban areas[An urban area is defined as one in which there is a fully established local
government. A non-urban area, on the other hand, does not have an established local
authority. The area could, for example, be part of a tribal authority or a regional
authority.]of residence. But findings based on the 1995
IES indicate the extent of these inequalities. These income distributions serve as
base-line indicators for future monitoring of change in income distributions. In future
years, for example, we shall be able to measure whether or not average incomes of specific
disadvantaged groups have increased in relation to other groups, and whether
proportionately fewer non-urban households fall into the bottom income category when
compared to the present situation.
National and provincial average annual household incomes in 1995
In October 1995, the average annual income per household in South Africa was found to be R41 000. This includes regular income, such as salaries and wages, as well as any other income. However, average annual household income varied when the data set was divided into different sub-groups or categories. In this section we examine these differences.
Average annual household income in 1995 by race
The IES results confirm that income in South Africa is unevenly distributed by race of the head of the household, with the largest race group in the country being the poorest.
The nine new provinces of South Africa
Since 1994, South Africa has been divided into nine provinces. These differ from each other, not only in population size,[In this discussion, we focus on the percentage of actual people in each province, rather than on the percentage of households, because population density is measured in terms of individuals in an area of a given size. In the rest of the report, however, we focus on households, since we are interested in household, not individual, income and expenditure.] but also in urban and non-urban population proportions. Africans constitute the majority of people in all provinces, except in the Western and Northern Cape, where coloureds are in the majority. The vast majority of the Indian population lives in KwaZulu-Natal, while whites are spread across all nine provinces albeit unevenly.
The Eastern Cape
The Eastern Cape is largely non-urban, occupying 14% of the countrys land mass.
It is estimated that 16% of the South African population lives in this province, making it
the third largest in the country. Approximately 65% of people in this province live in
non-urban areas. The former Transkei and Ciskei, two impoverished areas styled as
independent states under the bantustan policy of the apartheid regime, are
found in this province. The vast majority of those living in the Eastern Cape (85%) are
African.
The Free State
A relatively small number of people some 7% of the total South African
population live in the Free State. It is the second smallest province in population
size, and occupies 11% of the land mass. A high proportion of people live in small towns,
with less than half the Free States population living in non-urban areas. A large
proportion of people living in the Free State (81%) are Africans, who tend to live in
former homelands (Qwa Qwa or that small part of the former Boputhatswana which
was allocated to the Free State), on large white-owned commercial farms, or in townships
surrounding the towns.
The Northern Province
The Northern Province contains approximately 11% of all the people in the country,
almost all (95%) of whom are African. The former independent state of Venda,
and large proportions of the former self-governing territories of Lebowa and
Gazankulu, are situated in this province. It is largely non-urban, with 88% of the
population living in non-urban areas.
The North West Province
The North West Province contains 8% of all South Africans, making it the fourth
smallest province in population size. It occupies 10% of South Africas land mass. It
is largely non-urban, with 61% of the population living in these areas, and contains most
of the former Boputhatswana. A large proportion of the remainder of the land in this
province consists of white-owned commercial farms.
The Northern Cape
In terms of population size, the Northern Cape is the smallest in the country, since it
has 2% of all the people. But in area, it is the largest province, covering a vast 30% of
South Africas land mass. In common with the Western Cape, the majority of people in
this province (57%) are coloured, while 29% are African. Those living in the province tend
to be clustered in small towns or villages: 71% live in areas defined as urban, and large
parts of the province are either uninhabited or sparsely inhabited.
Mpumalanga
With its 7% share of the people, Mpumalanga is the third smallest province as far as
population size is concerned. It occupies 6% of the countrys land mass. The former
homelands of KwaNdebele and KaNgwane, and parts of Lebowa and Gazankulu, are
found within its borders. Ninety percent of its people are African. Most people (70%) in
the province live in non-urban areas.
KwaZulu-Natal
With its population of more than one-fifth (20%) of all the people in the country,
KwaZulu-Natal is the most populous province, but occupies only 8% of South Africas
land mass. While the vast majority of people in the province (83%) are African, a large
proportion of the one million Indians in the country (80%) live here. It is largely rural
in character, with 61% of the population living in non-urban areas.
The Western Cape
The Western Cape, containing approximately 11% of the population, is overwhelmingly
urban 86% of its people live in urban areas. Its essentially urban character
distinguishes it from the other provinces discussed thus far. The province spreads over
11% of the land mass of South Africa. In common with the Northern Cape, the majority of
people living in the province (57%) are coloured, while relatively few in the province
(19%) are African.
Gauteng
Nineteen percent of South Africas population live in Gauteng, the second largest
province in terms of population size. But it is the smallest province as far as land mass
is concerned, occupying less than 2% of the country. It is almost entirely urban, with 94%
of its population living in urban areas. The majority of people living in the province
(62%) are African. However, a substantial proportion (31%) are white. Indeed, 40% of all
whites in South Africa live in Gauteng.
Average household income in each province
Table 2 indicates the substantial differences that exist in average annual household incomes when comparing provinces. (Estimates of the design effects, standard errors and confidence intervals of a selection of the most important of these variables are available from the CSS.)
The table shows that the Eastern Cape, which is largely rural, has the lowest annual average household income (R24 000), while Gauteng, which is almost entirely urban, has the highest (R71 000).
Differences in average annual household income by province and race
Within each province, there are marked differences in average annual household income by race. This is also indicated in Table 2.
Table 2: Average annual household income by race of head of household in each province
Province | Average annual household income | ||||
African R 000 |
Coloured R 000 |
Indian R 000 |
White R 000 |
Total R 000 |
|
Eastern Cape Free State Mpumalanga North West Northern Province Northern Cape KwaZulu-Natal Western Cape Gauteng |
17 14 20 21 26 13 24 22 37 |
24 16 30 25 43 18 41 33 53 |
58 - 78 - - 34 61 54 111 |
90 72 82 93 140 79 98 98 118 |
24 25 30 30 31 31 37 53 71 |
- Number of households in the survey was too small for this analysis.
Average annual household income by other sub-categories
In Table 3, the average annual household income is shown for a number of different sub-categories of the population, for example, urban residents and shack dwellers (those living in an informal dwelling).
- Households consisting of only one person have the lowest average incomes.
- This average tends to increase to reach its highest level (R51 000) in those households consisting of four people.
- Then it starts to decrease, reaching another low level of only R28 000 on average, per annum, for households consisting of eight or more people.
Table 3: Average annual household income in various sub-groups of the population
Sub-group | Average annual household income R 000 |
Type of area of residence:
Urban Non-urban |
55 23 |
Type of dwelling: House Informal dwelling Traditional dwelling |
52 15 14 |
Household size: One
person Two people Three people Four people Five people Six people Seven people Eight or more people |
25 49 47 51 46 37 30 28 |
Gender of head of household:
Male Female |
48 25 |
Occupation of head of
household: Management/prof./tech./admin. Clerical and sales Production/transport/services Pensioners |
101 41 38 23 |
Average incomes, on their own, do not describe how income is distributed within a particular sub-group. In this section, we examine the way in which income is distributed in various sub-groups by studying the proportion of households within each national income quintile for a number of variables.
Income distribution by race
Through looking at income quintiles, Figure 1 demonstrates that income is very unevenly distributed by race.
Figure 1: Income category by race of head of household
Income distribution by gender
Income in South Africa is also unevenly distributed by gender, with female-headed households being significantly poorer than male-headed ones.
Figure 2: Income category by gender of head of household
Income distribution by race and gender
Figure 3, which examines incomes by both race and gender, indicates that African, female-headed households are the poorest group in the country, followed by African, male-headed households, while white, male-headed households are the most affluent.
Figure 3: Income category by gender and race of head of household
Income distribution in urban and non-urban areas
The South African population is distributed evenly between urban and non-urban areas. But this distribution varies by race group. Almost two-thirds (63%) of Africans live in non-urban areas as against a far smaller proportion of coloureds (16%), Indians (5%) and whites (9%).
Annual household incomes vary widely in
urban, compared to non-urban, areas, as shown in
Figure 4.
Figure 4: Income category among urban and non-urban households
Income distribution by gender in urban and non-urban areas
Figure 5 examines income quintiles by gender of head of household, in both urban and non-urban areas. It demonstrates that non-urban, female-headed households are the poorest in the country, followed by non-urban, male-headed ones. On the other hand, male-headed households in urban areas are the most affluent.
Figure 5: Income category by gender of household head in urban and non-urban areas
Race and gender differences in income in urban and non-urban areas
Urban, non-urban and gender differences in incomes are most pronounced in African households, compared with coloured and white ones. (Indian households are excluded in this section, because there were too few female-headed, Indian households in the sample, particularly in non-urban areas, for further breakdowns). This emerges from a comparison of income quintiles by race and gender in both urban and non-urban areas.
African households
Table 4 shows that African, male-headed households living in urban areas have higher
incomes than African, male-headed households in non-urban areas. However, African,
female-headed households in non-urban areas have the lowest incomes of all.
Table 4: Income distribution by race and gender in urban and non-urban areas
Income quintile by race | Non-urban female | Non-urban male | Urban female | Urban male | Total |
%* |
%* |
%* |
%* |
%* |
|
African: Top quintile:
Quintile 1 Quintile 2 Quintile 3 Quintile 4 Bottom quintile: Quintile 5 Total |
3 12 18 28 37 100 |
7 15 25 28 26 100 |
11 24 25 21 19 100 |
19 29 27 17 8 100 |
10 19 24 24 23 100 |
Coloured: Top quintile:
Quintile 1 Quintile 2 Quintile 3 Quintile 4 Bottom quintile: Quintile 5 Total |
6 14 21 28 31 100 |
3 13 25 39 20 100 |
12 26 28 19 15 100 |
24 35 23 13 5 100 |
17 29 25 18 11 100 |
White: Top quintile: Quintile
1 Quintile 2 Quintile 3 Quintile 4 Bottom quintile: Quintile 5 Total |
52 31 7 8 2 100 |
75 18 4 2 1 100 |
38 32 17 8 5 100 |
73 19 6 2 0 100 |
65 22 8 4 1 100 |
* Due to rounding, figures may not always add up to exactly 100%
Among Africans, non-urban households are the poorest in the country. There are proportionately fewer female-headed households in urban areas in the lower income categories, compared to male-headed non-urban households.
Coloured households
In households where the head is coloured, a similar pattern emerges although, overall,
these households tend to have higher incomes than African households.
White households
White, male-headed households are amongst the most affluent in the country, while
white, female-headed households are less affluent.
This demonstrates that not only absolute, but also relative, comparisons are important considerations in understanding South African income distributions. White households generally have the highest incomes in the country, but within the category of white households, there are significant gender inequalities. White, female-headed households in both urban and non-urban areas are relatively well-off, compared with African and coloured households in these areas. But when compared with white, male-headed households, they are relatively poorer.
Differences in income distributions by province
Figure 6 demonstrates the uneven distribution of income within the provinces.
Figure 6: Income category by province
Income distribution by gender and area within each province
In Table 5, we examine income distribution differences among male-headed and female-headed households in urban and non-urban areas in each province, starting with the province that has the largest proportion of households in the lowest income category, and ending with the province that has the smallest.
Table 5: Income distribution by gender and urban/non-urban areas within each province
Income quintile by province | Non-urban female | Non-urban male | Urban female | Urban male | Total |
%* |
%* |
%* |
%* |
%* |
|
Eastern Cape: Quintile 1
(top) Quintile 2 Quintile 3 Quintile 4 Quintile 5 (bottom) Total |
2 7 11 28 53 100 |
5 9 20 35 31 100 |
10 21 22 22 25 100 |
31 23 19 17 11 100 |
11 13 17 27 32 100 |
Free State: Quintile 1 (top) Quintile 2 Quintile 3 Quintile 4 Quintile 5 (bottom) Total |
2 5 7 27 60 100 |
4 5 14 30 47 100 |
6 14 23 28 29 100 |
27 25 18 20 10 100 |
13 14 17 25 31 100 |
Northern Province: Quintile 1
(top) Quintile 2 Quintile 3 Quintile 4 Quintile 5 (bottom) Total |
6 14 18 24 37 100 |
17 18 20 24 22 100 |
16 25 27 21 11 100 |
40 28 15 9 8 100 |
15 18 19 23 26 100 |
North West: Quintile 1 (top) Quintile 2 Quintile 3 Quintile 4 Quintile 5 (bottom) Total |
3 11 16 32 38 100 |
5 11 18 32 34 100 |
11 23 23 21 22 100 |
33 25 24 12 6 100 |
14 17 20 25 24 100 |
Northern Cape: Quintile 1
(top) Quintile 2 Quintile 3 Quintile 4 Quintile 5 (bottom) Total |
7 15 18 22 38 100 |
13 9 12 34 34 100 |
6 16 27 27 25 100 |
21 23 27 17 13 100 |
14 17 22 24 23 100 |
Mpumalanga: Quintile 1 (top) Quintile 2 Quintile 3 Quintile 4 Quintile 5 (bottom) Total |
3 15 31 28 23 100 |
9 18 30 24 19 100 |
14 25 23 18 20 100 |
33 29 19 11 8 100 |
12 19 28 22 17 100 |
KwaZulu-Natal: Quintile 1
(top) Quintile 2 Quintile 3 Quintile 4 Quintile 5 (bottom) Total |
4 17 26 30 22 100 |
7 21 31 26 15 100 |
22 29 26 16 7 100 |
42 31 16 8 3 100 |
19 24 25 20 12 100 |
Western Cape: Quintile 1
(top) Quintile 2 Quintile 3 Quintile 4 Quintile 5 (bottom) Total |
30 24 18 20 8 100 |
12 14 33 32 9 100 |
20 28 26 15 11 100 |
38 29 20 10 3 100 |
30 27 23 14 6 100 |
Gauteng: Quintile 1 (top) Quintile 2 Quintile 3 Quintile 4 Quintile 5 (bottom) Total |
19 18 16 26 21 100 |
32 12 25 21 9 100 |
27 32 22 12 7 100 |
50 25 16 7 3 100 |
42 26 18 10 5 100 |
* Due to rounding off, figures may not always add up to exactly 100%
Eastern Cape
Table 5 shows that, in the Eastern Cape, incomes are highly unequally distributed by
gender of the head of household and by urban or non-urban place of residence.
Free State
Incomes are even more unequally distributed by gender and by urban versus non-urban
place of residence in the Free State than they are in the Eastern Cape.
When comparing all provinces, income distribution in the Free State is the most unequal in the country.
The Northern Province
There is a similar pattern of income distribution in the Northern Province as in the
Eastern Cape.
The North West Province
Income distribution in the North West Province, and inequalities in incomes, are very
similar to the Northern Province.
The Northern Cape
Mpumalanga
KwaZulu-Natal
The Western Cape
Gauteng
Findings regarding non-urban distributions of household income in Gauteng should be
treated with caution, since the income distribution patterns among both female- and
male-headed households in non-urban areas are based on a small number of households in the
sample. Nevertheless, the picture that emerges is consistent with the overall picture in
other provinces.
This establishes that income distributions, even in the wealthiest province, tend to be highly unequal.
Two additional measures of income inequality, namely Lorenz curves and Gini coefficients, further demonstrate the extent of income disparities in South Africa.
A Lorenz curve is a graph showing the cumulative income distribution in a given population, as illustrated in Figure 7. The relevant population in this case is the number of households in the country. The cumulative percentage of households, arranged from poorest to most affluent (from 0% to 100%), has been plotted on the horizontal axis, while the cumulative percentage of income, arranged from least to most, (also from 0% to 100%) has been indicated on the vertical axis.
A cut-off point of 20% on the horizontal axis indicates the poorest 20% of households, while a cut-off point of 60% indicates the bottom 60% of households. A cut off point of 20% on the vertical axis indicates 20% of income while a cut-off point of 60% indicates 60% of income. A diagonal line joins the vertical and horizontal axes.
In a Lorenz curve, the vertical axis on the right-hand side represents one side of a triangle, while the horizontal axis represents the second, and the diagonal connecting the two axes represents the third side of the triangle. The Lorenz curve is drawn within this triangle. The curved line in Figure 7 is the actual Lorenz curve.
The nearer this curve is to a straight diagonal line, the more equal the income distribution. The more curved the line, the less equal the income.
A Gini coefficient involves a convenient short-hand way of indicating the relative degree of income inequality, based on the Lorenz curve. It can vary from the value of zero, indicative of absolute equality in income distribution, to the value of one, indicative of absolute inequality. It is essentially a ratio. The area between the Lorenz curve and the diagonal forms the enumerator, while the total area of the triangle in the Lorenz curve forms the denominator.
In other words, the richest 20% of households have 65% of all household money at their disposal, while the poorest 20% have only 3%.
Figure 7: Lorenz curve indicating the extent of income inequalities in 1995
Table 6 gives the Gini coefficient for the country as a whole, and for various sub-groups of households.
Table 6: Gini coefficients of different types of South African households
Type of household | Gini coefficient |
All households | 0,59 |
Race of head of household: African Coloured Indian White |
0,52 0,50 0,44 0,49 |
Gender of head of household: Male Female |
0,75 0,55 |
Type of area: Urban Non-urban |
0,57 0,55 |
Income in South Africa is distributed in a highly unequal manner. Annual household incomes vary by race, gender and province; within province; and by urban and non-urban environments. African female-headed and male-headed households in non-urban areas are the poorest. Indeed, African households generally tend to be the least affluent, followed by coloured and Indian households, while the most affluent are white. Female-headed households in urban areas are better off than male-headed households in non-urban areas.