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Tshwane beats Jozi, CT in highest per capita personal income

Cape Town - The importance of South Africa's metros stand out at the heart of the country's economy, Standard Bank economist Siphamandla Mkhwanazi told Fin24 on Monday.

He analysed the national gross domestic product (GDP) per capita - sometimes used as a simplistic measure of living standards - and disposable income per capita in SA in real terms over three periods, namely 2000 to 2005; 2006 to 2010 and 2011 to 2015. It shows that over half of SA's GDP belongs to the metros.

Mkhwanazi was also surprised to see that, on a city level, Tshwane has the highest nominal personal income per capita (R79 100 p/a), in his view, likely due to the number of government employees living in the city. Tshwane is followed by Johannesburg (R76 550 p/a) and Cape Town (R73 980 p/a). Of all the metros, Mangaung has the lowest personal income per capita (R47 800).

However, between 2012 and 2014, the real per capita income in Tshwane and Johannesburg declined by 7% and 7.3% respectively, in contrast to Cape Town where real personal income per capita rose by 3.3%.
 
On average, personal income per capita is higher in the metros (R58 000 p/a in 2014) than in mining or industrial towns (R50 960 p/a in 2014) - despite higher population densities in the metropolitan areas. Between 2012 and 2014, however, the average income per capita for both metros and mining or industrial towns recorded near zero growth rates.

"It is clear that SA's metro areas are important regions - both economically and politically," said Mkhwanazi.

In general, Mkhwanazi found that, although both the GDP and disposable income per capita in SA are showing improvement, it is at a gradually slowing pace.

The average income for South Africans grew the slowest in the period 2011 to 2015 (3%), compared to 12% in 2000 to 2005 and 5% in the period 2005 to 2010. Living standards for South Africans improved the most during the period 2000 to 2005 (10%), while the period 2011 to 2015 recorded the lowest per capita growth at just 2%.

An analysis of GDP per capita in real terms and nominal personal income per capita at provincial level for the period 2011 to 2014 shows that Gauteng residents have the highest GDP per capita (R80 800 per year), followed by those in the Western Cape (R68 200 p/a). Limpopo has the lowest personal income per capita (R29 500 p/a).

In real terms, however, the purchasing power of individuals living in Gauteng declined by 6% between 2011 and 2014, whereas Limpopo residents experienced the fastest growth (15%) in the same period.

READ: Consumers cut living expenses, but aren't saving

Racial picture

On a racial level, Mkhwanazi's analysis shows the white population has the highest income per capita (R215 000 p/a) whereas the black population has the lowest (R29 000 p/a).

Mkhwanazi told Fin24 that from 1996 to 2011 there was "some sort of improvement" in the general income gap between the different racial groups, but it has digressed a bit. In his view the slower economic growth in SA has likely contributed to the income distribution among the racial groups having started to widen again.

"Now that our economy is not growing at a faster rate, it impacts the rate of closing the income gap. This is because those on higher incomes will likely remain there, whereas those on the lower levels are losing incomes due to losing jobs," he explained.
 
Between 2011 and 2014 the Indian/Asian population saw the fastest growth in income per capita (28%), while the coloured population had the slowest growth in income per capita (20%).

Mkhwanazi points out that since 1996, in relative terms, for every R1 earned by white individuals, blacks earned 13 cents. The Indian/Asian population, however, seems to be closing the gap compared to whites quicker than to both blacks and coloureds. For every R1 earned by their white counterparts, Indians earn 51 cents (up from 43c in 1996 and 50c in 2011).
 
Compared to 2011, blacks and coloureds earned 1c less in 2014 for every R1 earned by their white counterparts. At the same time income inequality - as measured by the Gini coefficient - is wider among black South Africans and the gap has gotten even wider since 1996. According to Mkhwanazi, among white South Africans there is less income inequality and it has become more equally distributed since 1996.

READ: SA GDP growth too slow to improve conditions - IMF

Living standards

Mkhwanazi's analysis of Living Standards Measures (LSMs) shows that, overall, migration into higher LSMs (LSM 8-10) seems to have stagnated in recent years. The SA adult population is clustered around the LSM 4-7 categories. He points out that the roll out of services and welfare payments, together with growth in disposable income, have been responsible for lifting many out of the lower LSMs.
 
Of those in the lowest standard LSM 1 category, 65% are from the Eastern Cape (up from 63% in 2011), and 10% are from Mpumalanga (up from 1% in 2011) and KZN (down from 28% in 2011) respectively. The LSM 1 category comprises mostly of the black population (99%) - up from 97% in 2011 - and 1% is made up of the coloured population (down from 3% in 2011).

Of those in the highest standard LSM 10 category, 40% are in Gauteng (down from 50% in 2011). Together, KZN, Gauteng and the Western Cape account for 83% (up from 80% in 2011) of those living in the highest standard. By race, LSM 10 comprises 49% of whites (down from 61% in 2011) and 30% of blacks (up from 25%).

ALSO READ: SA remains unequal, but people are living longer

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