Fin24

SA must fight inequality - World Bank

2012-07-24 15:54

Johannesburg - South Africa must tackle economic inequality in order to create jobs and bring down unemployment statistics, according to a World Bank report released on Tuesday.

South Africa is one of the most unequal countries in the world, with a Gini coefficient of 0.7 in 2008, the bank noted in its South Africa Economic Update: Focus on inequality of opportunity.

The Gini coefficient is an internationally used measure of income inequality.

The top 10% of the population accounted for 58% of South Africa's income.

The bottom 10% accounted for just 0.5% of income, and the bottom 50% less than 8%, said the bank.

"At the heart of high inequality lies the inability to create employment opportunities on a large enough scale," said the report.

Unemployment of 25.2% (or 33% if discouraged workers were included) was among the world's highest.

Social grants made up 70% of the income of the poorest 20% of South Africans.

If these grants were excluded, 40% of South Africans would have seen their income decline in the first decade after apartheid.

"Even after accounting for the equalising role of social assistance, income inequality remains extraordinarily high," said the bank.

"To reduce it to more reasonable levels over the long run, social assistance is clearly not enough and needs to be complemented by other initiatives."

South Africa should thus focus on human capital development, particularly among children and youth.

Children should have the same opportunities regardless of family circumstances, race, gender or location.

Access to a basic set of goods and services during childhood could be an important predictor of future outcomes, including educational achievements and earnings.

These basic services included education, healthcare, essential infrastructure such as water, sanitation and electricity, and early childhood development programmes.

Several factors affected access to these services in South Africa, including gender, ethnicity, household composition, the total number of children in the household, parents' education, the gender and age of the household head, orphan status, and location of the household.

There was near universal access to schooling for children under the age of 16, as well as telecommunications.

But access to other services was below 60%, including health insurance, a safe water supply, improved sanitation, adequate space without overcrowding, and finishing primary school.

Other opportunities, such as access to early childhood development programmes, safety in the neighbourhood and access to electricity, carried low to moderate inequality.

South Africa fared well on school attendance when compared to other countries, but ranked below them for the number of children completing primary school on time, and access to water, sanitation and electricity.

"Trends suggest improvements, but the gaps with other countries are generally not closing," the bank warned.

Children's inequality was shaped by circumstance.

Children living in townships, informal settlements or rural areas, as well as parents' education, contributed the most to inequality.

Race- and gender-based disparities were not the most important factors in determining inequality.

South Africa's near universal access to primary education was a necessary first step for equalising opportunities among children. Access to telecommunications and electricity had also improved.

Water and sanitation access still presented a challenge.

The country needed to give children the opportunity to finish primary school on time and be exposed to early childhood development programmes, and improve physical safety.

South Africa's inequitable access to opportunities also affected the labour market.

With chronically high unemployment, even those who have jobs face sharp disparities in wage earnings based on race, gender, location and union membership.

There was persistent inequality between different groups in their access to the few jobs available.

Causes of this inequality had changed over the past four years. Education and location had become more important than previously. This had increased the consequences of unequal opportunities to education earlier in life.

Education now accounted for more than half the inequality in employment, with a high and rising skills premium.

Wage inequality as a result of the skills premium was a key driver of income inequality in South Africa.

Young workers and residents of townships, informal settlements and rural areas found education particularly challenging.

"An individual's age is an unusually large contributor to inequality in employment in South Africa," the report stated.

Odds were increasingly stacked against the youngest workers.

"A young person's chances of having a job, a full-time job or formal sector job, seem to depend more on circumstances beyond their control than the skills they have acquired," the report said.

Adverse circumstances could compound inequalities over multiple stages of life and across generations.

To break this cycle of inequality, South Africa would need to ensure children accessed education which met the same quality standards and allowed equal access to employment opportunities.

Water, sanitation, healthcare, and overcrowding would also need attention.

"Policy design needs to recognise that children of certain circumstances are vulnerable to deprivations in multiple dimensions simultaneously," it said.

Comments
  • TheyTookMyNickLaZynEko - 2012-07-24 16:02

    BEE/AA = inequality.

  • fussed.anderson - 2012-07-24 16:04

    World Bank Reported. Dont you think it would be better telling that to goverment, we've tried, maby you will have better luck

      Rob - 2012-07-24 16:27

      Create is not a word that is understood much. Replace with AA & BEE is much more acceptable it appears.

      George - 2012-07-24 16:54

      Inequality in SA is a know issue, please report some real news. We know this already. We even know why is SA unequal and how to solve the problem. Our only problem is the ANC, they are not addressing the problem in a manner that will benefit the country the most. Example: U can't divide wealth to create more wealth (to slow learner. If I have two eggs. dividing them does not increase my net total of eggs they are going to remain the same or less). We need better ways to empower the poor, taking from the rich is not a solution

      George - 2012-07-24 16:55

      Rob: BEE has been useless so far, so just forget about it

      George - 2012-07-24 17:00

      The ANC is creating more inequalities by enriching themselve only and leaving everybody else in poverty, dumping text book under bridges another kid fails even more inequalities. Denying there is a problem is actually our main problem, the whole ANC needs a moerse as whip

      louis.olivier.988 - 2012-07-24 17:07

      Help remove this corrupt CancER government will be a good start

      George - 2012-07-24 17:08

      They say this are the results of apartheid: What? The ANC has been in power for 17 year. Before SA 1st election ANC promised people free quality education. if they can just keep (could have) that promise, they could have compesated everyone who was disadvantaged by aparheid in less than 15 year. But nooh... what they do: They enrich themselves. Most of them are among the richest people in Africa ain't that a beach

      jean.reymore - 2012-07-24 21:12

      Its scary - at my college out of 10 mates I know pretty well 8 of them want to relocate elsewhere in the world - the advantage I have is that I have the money to relocate and I will move to the USA once I got my degree - cant wait for that day to move out of this land (I hate it here, sorry to say). ps: News24 please dont delete my comment again - I am not attacking anyone...

  • nrgx.nrg - 2012-07-24 16:10

    please put it in simpler wording for our "leaders" to understand. We have been saying this for years ans still they carry on. Its time for the World Bank to join in the plea for the anc to step down. We are ALL oppressed by these "dick"tators, perhaps bordering on worse than apartheid. You were quite happy to apply sanctions under that moronic rule, where are the sanctions under this communistic dictatorship?

  • shirley.steenkamp - 2012-07-24 16:23

    Equality starts with government putting an end to their own greed and corruption and concerntating on uplifting the country and not cadres bank balances!

  • colin.langley - 2012-07-24 16:26

    I tried to start a self empowerment business for older people of all colours to become financially stable. I was turned down for finance because i was white. Go figure.

      oomkrummel.krummel - 2012-07-24 16:55

      You are presently disadvantaged..you and I are victims of this oppressive apartheid regime..called the ANC, BEE... it’s crazy..!!!

  • iven.king3 - 2012-07-24 16:27

    S.A must also fight against Xenophobic behaviours among S.A citizens!

  • philip.vde - 2012-07-24 16:38

    Not enough people in the country that wants to work !! I'm white and got nothing for free , my parents were poor but insisted I must have a good education and work hard for what I want. It's easy to blame it on something , and turns out it was " apartheid " , never mention how the education system has collapsed under the control of the ANC ... and this is where it needs to start !!!

  • nikondaniel - 2012-07-24 16:42

    "Children should have the same opportunities regardless of family circumstances, race, gender or location" Why should current generations suffer for the doings of their forefathers. Time to get over Apartheid!

  • ambauli - 2012-07-24 16:52

    In this corner, with a deplorable fighting record and under investigation for numerous shenanigans and chicanery, the rainbow nation, knockout station, SOUTH AFRICA!! In the other corner, with a world spanning career of monumentous proportions, many economic giants have fallen at it's feet, the insidious serpent, cantakerous catastrophe, baby candy stealing, monstrous mauler, INEQUALITY!! Now I don't mind tellin you fight fans, South Africa is the underdog in this match.

  • arthur.hugh - 2012-07-24 17:16

    Suuuure World Bank, as soon as you stop your illegal activities of lending to banks with no interest and generating new cash from illegal interest from the banks you lent it to in the first place.

  • jacques.shepperson - 2012-07-24 21:47

    give jobs to people with a gap in their education, because they cant learn as the school hand books are dumped under a bridge... etc!

  • gary.lyon.509 - 2012-07-25 13:51

    While these statistics are alarming they pale in comparison to the economic divide in the US i.e. 1% control 90% of the wealth and 50% control 1% of the wealth with the remaining 49% controlling 9%. Also, this is pretty rich coming from the World Bank that makes its money by promoting corruption by the elite, as well as, privatisation of resources. They have also robbed countries of their wealth through forcing interest payments on debt incurred because of poorly conceived projects and spurious financial policies actively foisted on countries and their citizens, through the manipulation of the elite. The World Bank is simply a tool for the rich and powerful to maintain the status quo, along with the IMF and the WTO. We don't need or want their input thank you.

      harry.dewet.5 - 2012-07-26 10:09

      WTF you mean? They at least identified the basic problem in SA and proposed a good solution. Its time the ANC realize that they are responsible for the mess and start taking big steps in improving basic services; especially proper education for all SA's children!

  • andy.rossell - 2012-07-25 14:01

    This is the type of equality we as South Africans have to put up with in our 20 year old democracy. SECTION B: CONFIRMATION OF B-BBEE STATUS NB: It must be noted that the company will recognise only the following categories of persons as "Black" for purposes of B-BBEE, as defined in the Codes of Good Practice: African, Coloured or Indian persons who are natural persons and: • are citizens of the Republic of South Africa by birth or descent; or • are citizens of the Republic of South Africa by naturalization before the commencement date of the Constitution of the Republic of South Africa Act of 1993; or • became citizens of the Republic of South Africa after the commencement date of the Constitution of the Republic of South Africa Act of 1993, but who, or the Apartheid policy that had been in place prior to that date, would have been entitled to acquire citizenship by naturalization, prior to that date.

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