Friday, March 7, 2008

Poverty data in South Africa continues to make headlines

The latest Income and Expenditure Survey points out that real income for the poorest 30% have risen, especially as a result of expanding social welfare payments. See also article in Business Day, Growth has helped richest and poorest.

This is very good news. At least a substantial group of people are improving their lots. There is more though. This can also easily mask the fact that such a development path is unsustainable. Population growth for instance continues to outstrip net job creation (see earlier post Unmasking Africa's seven success stories).

A few numbers: The magnitude of poverty is stark: around 20-21 million people depending on the way this is measured (see earlier posts Poverty - any options left? and Poverty -definitions and directions of change). South Africa's population is around 47 million,and 12 million people, mostly children and pensioners are benefitting from social grants. The bottom 30% counts around 14 million people. According to the SAIRR 4.2 million people lived on less then a $1 per day in South Africa, up from 1.6 million in 1996.

What do the numbers tell us? The poorest approx 8-10% do not benefit from either economic growth or social grants, the following 20-22% are recipients of social grants and have improved their lot significantly, another 6-7 million or 15% are classified as poor and scrape some living, while the remaining and the 45% in the middle (apart from the 10% that IES classifies as rich) are exposed to an economy that does not absord employment fast enough.

What should policy makers do? Start caring for the bottom 10% and hawkishly watch the rising levels of discontent of the 45%. Keep breaking your head on how to meaningfully engage another 20 million people in the economy.


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