Income inequality in SA: 73% earn below R6 000 per month, 3.3% earn more than R52 000

Income inequality in South Africa is again demonstrated by the findings of a report on personal income estimates that found that 73.7% of the adult population earns below R73 351 per year (less than about R6 110 per month), while only 3.3% earns more than R625 992 per year (about R52 170 per month).

The Household Wealth Research Division of the Bureau of Market Research’s report on personal income estimates for South Africa from 2018 to 2022 shows a clear picture of income inequality with low income earners accounting for 10% of cash flow income, while the high income earners earn 44.8%, while 23% of the adult population relies mainly on grants as cash flow income source.

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The most alarming finding is that 32.1% of the adult (older than 15) population does not receive any form of cash flow income, instead depending on in-kind transfers and support from friends and relatives.

Women are also getting the short end of the stick with income inequality. The report shows that although there is an almost equal gender population distribution between females and males, females remain at the lower end in relation to the cash flow income earnings. It is estimated that 47.3% of the adult population are male but earn 58.5% of the cash flow income in the country.

Total income increased

According to the report, total income is estimated to have increased from R5.19 trillion in 2021 to R5.64 trillion in 2022, an annual increase of 8.7%. The main source of growth originated from investment incomes, recording an annual increase of 30.5%, while the growth in the other sources of income remained relatively muted at close to 5%.

Cash flow income also increased by a slightly lower annual rate of 8.5%, increasing from R4.57 trillion in 2021 to R4.96 trillion in 2022. The income estimates imply an estimated annual cash flow income of R113 151 per person for the adult population in 2022.

It was estimated that 28.1% of the adult population live in Gauteng, the economic hub of the country, earning 34.5% of cash flow income, followed by KwaZulu-Natal at 18.6%, earning 12.3% of cash flow income and the Western Cape at 12.6%, earning 26.1% of cash flow income in 2022.

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Nearly a third (29.9%) of the adult population earning salaries and wages as their main source of cash flow income generated more than two-thirds (64.0%) of the cash flow income.

People with qualifications earn more

The research also showed that there is a positive correlation between educational qualifications and income earning potential. Economic empowerment was evident from the analysis as a significant proportion of 48.8% of the cash flow income was generated by a mere 12.9% of the adult population that is estimated to have a tertiary level education.

According to the report, economic and financial conditions are expected to remain volatile for the foreseeable future due to significant pressure on local economic growth, employment creation and various other downside risks, such as rolling blackouts, rising interest rates, sticky inflation and a weaker exchange rate.

The positive trend in total and cash flow income is expected to continue in 2023. An estimated nominal growth rate of 7.2% in total income is expected for 2023, translating to an expected level of R6.0 trillion, while a similar nominal growth rate is expected for cash flow income, increasing to R5.3 trillion.

The magnitude of the improvement in personal incomes is expected to be greater for those individuals with investments, including income from dividends, interest, rent, pensions and annuities.