Social development

Social grants making an impact

7 April 2008

South Africa's social security system, a major monthly income source for over 12-million people, has been playing an increasingly important role in reducing poverty and inequality in the country since 2000, a survey by Statistics South Africa (Stats SA) finds.

The latest five-yearly Income and Expenditure Survey (IES), released last month, also shows that between 2000 and 2005/06, black households' share of consumption expenditure rose from 42.9% to 44.3%, while white households' share fell from 44.1% to 42.9%.

However, Stats SA pointed out, the number white South Africans declined from 10.1% to 9.2% of the country's population over the same period, while the number of black South Africans increased from 78.3% to 79.4% of the population.

The survey found that black African households experienced increases in their share of expenditure in each category except for miscellaneous goods and services. The largest percentage point increase was in food and non-alcoholic beverages, furnishings, household equipment and maintenance and communication, including cellular phone purchases.

Income gap

The IES found that the gap between the rich and the poor remains a concern, with 10% of the population continuing to earn 50% of household income in the country, while the poorest 40% accounted for less than 7% of household income.

Inequality continues to remain high between population groups and within individual population groups, Stats SA said, adding that the country's Gini coefficient - a measure of inequality based on disposable income - was 0.72.

Stats SA's deputy director-general for economic statistics, Dr Rashad Cassim, explained the coefficient by saying that if everyone in South Africa earned the same amount of money, then the country's Gini coefficient would be zero.

Within individual groups the Gini coefficient was highest at 0.63 among black African households, with other population groups ranging between 0.56 and 0.59.

According to the survey, the government's social programmes were having a "significant impact" on addressing inequality: if state social security grants were not included in calculating the Gini coefficient, the whole country would be at 0.80 rather than the current 0.72.

The estimated annual gross income for all South African households in the 2005/06 survey was R929.2-billion, with the bulk of the amount being derived from work activities. Wages and salaries totalled some R559.9-billion or 64.4% of gross income.

Household expenditure

The IES also found that South Africans were spending close to 60% of total household expenditure on food, housing and transport. The survey noted a substantial reduction in expenditure on food in relation to total consumption from 2000 to 2005/06.

"The three largest components in the IES were housing, transport, food and non-alcoholic beverages," Cassim said. "The phenomenal increase in transport expenditure [which includes the purchase of motor vehicles] was more significant than we expected, but is in line with the growth in the economy over the last five years."

Analysis of household income and expenditure is based on the results of a survey conducted by Stats SA between September 2005 and August 2006, covering 24 000 households

Cassim noted that due to the nature of the survey questions, especially those regarding earnings derived from dividends and the amount of tax paid in relation to earnings, there could be discrepancies.

"Biases arose on the income side whenever respondents under-reported their earnings whether through forgetfulness or out of a misplaced concern that their reported data could fall into the hands of the taxation authority," he said.

Source: BuaNews
SA starts social grant clean-up, upgrade South Africa's social security system is having a significant impact on inequality in the country (Photo by Isabel Schoeman. Copyright South African Tourism)

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