Johannesburg: The electricity crisis again underscores SA’s staggering level of inequality. According to the recently released Income and Expenditure Survey (IES), in 2005-06 the poorest 10% of households used only about 4% of residential electricity. The richest decile , in contrast, consumed about 23%.
That is why stopping the programme of electrification to historically unserved communities won’t release much electricity. Between 1994 and last year, about 2-million households joined Eskom’s list of customers. Their share in total electricity consumption, however, came to only 3%.
Inequalities still shape every economic process in SA. Yet experience demonstrates that sustained economic growth cannot occur where deep inequalities and the associated mass poverty undermine domestic demand, social cohesion and the extension of education and skills.
The challenge, as always, is to balance twin imperatives: maintaining economic expansion while, simultaneously, reshaping the economy to provide opportunities for the historically marginalised majority.
The IES confirms that progress toward greater equity remains painfully slow, despite some improvements in recent years. The survey finds that in 2005, half of all households had incomes under R2000 a month. For the poorest 10% , the median monthly income was below R400; for the richest it was R34000 (94 times as high).
The biggest gap emerged between the top 10% and everyone else. The richest 10% of the population enjoyed just over half of all income. The next richest 10% — mistakenly called a middle class, mostly top-end formal sector employees such as teachers, plus some selfemployed people — got 18% of all income. Meanwhile, the poorest 20% — the unemployed, domestic and farm workers, and other working poor — got just 1,4%.
Detailed IES findings illustrate the implications for economic integration as well as the quality of life.
* Just over 1% of the poorest 10% of households owned a computer, a car or a camera — assets enjoyed by three-quarters of the richest decile.
* For the poorest 10% of households, employment, including self- employment, contributed only a third of income. Instead, these households relied heavily on social grants and family support to survive. For the richest 10% of households, four-fifths of income came from employment or investments.
* Poor households spent virtually the same share of their income on education as rich ones — just over 2% on average. But for the average rich household, that translated into more than the total annual income of a household in the poorest 10%.
The link between race and class has weakened, but remains strong. The average African household had an income of about R3000 a month — just over half as much as the average white household. Whites made up just under 10% of the population, but enjoyed 45% of income. Still, progress in reducing inequalities around race has been far faster than progress toward greater equity overall, as black professionals have risen in the state and economy.
Social grants, combined in the past five years with relatively rapid expansion in lower-level jobs, have been critical to improvements in conditions for the poor. If we look only at income from work and investments, excluding social grants and support from family members, the top 10% of households received, on average, 22 times the average income of all other households, and more than 200 times the income of the poorest 10%.
But grants cannot close the huge and long-standing gap between the rich and the rest of society. The only sustainable solution is to provide more economic opportunities. That requires a complex set of measures. The critical elements are: support for labour-intensive industries, which expand opportunities for employment on a mass scale; opening the door to smaller businesses; and far more equitable access for the poor to education and training, including at the universities.
* Opinion piece by Neva Makgetla, sector strategies co-ordinator in the Presidency.
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