4 April 2014
Poverty levels dropped in South Africa between 2006 and 2011, reaching a low of 20.2% for extreme poverty and of 45.5% for moderate poverty, according to the Poverty Trends in South Africa report released by Statistics SA on Thursday.
The report applies three measures of poverty, with extreme poverty defined in terms of a “food poverty line” below which people are unable to purchase enough food for an adequate diet.
Less extreme poverty is defined in terms of a “lower-bound poverty line”, below which people can afford an adequate diet but would have to sacrifice food to purchase non-food items; and an “upper-bound poverty line” marking the level at which people can purchase both adequate food and non-food items.
The drop in poverty in the country, according to the report, translates to roughly 10.2-million South Africans living in extreme poverty (below the food line) in 2011, compared to 12.6-million in 2006; and 23-million living in moderate poverty (below the upper line), compared to 27.1-million in 2006.
In terms of the lower poverty line – higher than the food line but lower than the upper line – 32.3% of the population, or roughly 16.3-million people, were living in poverty in 2011, down from 42.2% or 20-million people in 2006. It is this line that the country’s National Development Plan (NDP) uses in setting its ambitious target of eliminating poverty by 2030.
The report notes the dramatic impact the global financial crisis of 2008/09 had on the livelihoods of South Africa’s poorest, with the number of people living below the food line jumping to 15.8-million in 2009 before dropping below 2006 levels again by 2011.
Impact of social wage ‘critical’
The overall decrease in poverty is attributed to the combination of a growing social safety net, income growth, above-inflation wage increases, decelerating inflationary pressure, and an expansion of credit.
“[I]t is critical to note the positive impact the provision of a ‘social wage’ package has been in helping reduce poverty in the country,” the report states.
The South African government provides a “social wage” in various ways, including free primary health care, no-fee paying schools, social grants (most notably old-age pensions and child support grants), state-subsidised housing, and the provision of basic services (water, electricity and sanitation) to households.
According to the UN Development Programme’s 2013 Millennium Development Goals country report for South Africa, close to 60% of government spending is allocated to the social wage, and expenditure on these services has more than doubled in real terms over the past decade.
“There has been a doubling in per capita health spending over this period, 1.5-million free homes were constructed, and free basic education was provided to the poorest 60% of learners,” Statistics SA says in its report.
“Although initially seen as a short-term measure to address poverty, social grants have increasingly become a source of livelihood in South Africa and have played an instrumental role in reducing poverty levels.”
The decline in the number of people living below the food poverty line is corroborated by Stats SA’s latest General Household Survey, which shows that self-reported hunger in South Africa dropped from roughly 30% in 2002 to just 13% in 2011.
Inequality still among world’s highest
However, while the poverty situation is improving, inequality in the country remains a serious problem, according to the Poverty Trends report, which measures inequality in terms of the Gini coefficient – a number between 0 and 1, where 0 indicates total equality and 1 indicates total inequality.
South Africa’s Gini figure was approximately 0.65 based on expenditure data (per capita excluding taxes) and 0.69 based on income data (per capita including salaries, wages and social grants) in 2011.
“These high levels of inequality, amongst the highest in the world, are only slightly smaller than the Ginis recorded in 2006 [0.67 and 0.72 respectively]”, the report states.
“The share of national consumption between the richest and poorest remains stubbornly stagnant. The richest 20% of the population account for over 61% of consumption in 2011 (down from a high of 64% in 2006). Meanwhile, the bottom 20% see their share remaining fairly constant at below 4.5%.”