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Recession widened inequalities: study

Johannesburg - South Africa's recovery from recession has been slow to reach middle class workers and the poor, exacerbating the country's racial inequalities, the author of a new study said on Monday.

The results of the 2010 Personal Income Estimates for South Africa show that the country's first recession for 17 years hit hardest among the middle class and the poor, and those groups have been slowest to recover from the downturn, said lead author Carel van Aardt.

"In your middle-income groups, where there have been plus or minus about a million job losses; the recovery is still incredibly slow. And we can see from the latest job statistics that jobs are still being shed," Van Aardt said.

"The recession clearly put the brakes on the growth of the emerging middle class and upper middle class."

Van Aardt, a professor at the University of South Africa's Bureau of Market Research, said that black workers had been worst affected by the downturn.

"It's very clear that the highest growth in unemployment rates during the recession time was for the African population. The recession had the hardest impact on the African population," he said.

South Africa's economy entered its first recession since the end of apartheid in the last quarter of 2008, returning to growth in the third quarter of 2009.

But the still-tepid recovery has not boosted employment, with the economy shedding 86 000 more jobs in the third quarter of 2010.

Van Aardt said that although a black professional class had emerged since the end of apartheid, the recession hurt lower-income black workers and contributed to inequality in a country still struggling to overcome the legacies of white minority rule.

His study found that collectively whites still out-earn blacks in South Africa, with white adults expected to make a joint R795bn in 2010, compared to R734bn for black adults, even though whites make up 9.2% of the population and blacks 79.4%.

Per capita, white adults take home R179 380 a year, nearly six times the R30 279 per capita annual income for black adults.

That gap threatens the development of a country which depends on household spending for economic growth, Van Aardt said.

"When you look at the structure of GDP (gross domestic product) growth in South Africa, about 62% of that GDP growth results from household consumption expenditure," he said.

"If you've got fairly low levels of household consumption expenditure growth because of a lot of households' incomes being cut in those lower income categories, that definitely has an impact on economic growth."
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