Gender, race and education: Factors driving income inequality in SA

The generalisation that 50-year-old white men with tertiary qualifications and in full-time employment earn more money than other demographic groups in SA has been confirmed. Being in Gauteng also helps.

Young black females with low levels of education in Limpopo and the Eastern Cape find themselves at the other end of the spectrum. This demographic group can be singled out as the poorest in SA.

ALSO READ: Debt index shows consumers are battling with debt and stagnant incomes

These conclusions come from analysis of data collected for Statistics SA’s Quarterly Labour Force Survey (QLFS) – in particular, its analysis of income and earnings data collected as part of its quarterly employment survey of households in SA.

The study found that the median income for older employees is much higher than that for younger workers – understandable, considering the difference in levels of experience.

Median earnings still differ by race, with white respondents to the survey earning more than coloured and Indian employees, who in turn earn more than blacks.

ALSO READ: South Africans spend almost half of their income to pay off debt

The median income for women is around 80% of that of men.

Stats SA specifically notes that the data is based on a household survey and that the analysis covers the labour market activities of those aged 15 to 64. Questions about earnings and relevant information were included in the QLFS questionnaire from the third quarter of 2009, with the aim of producing relative earnings data and earnings distributions.

Median vs average

The report states that relative earnings relate to the comparisons of the earnings of one socio-demographic group with those of other groups – for example, female-to-male earnings ratios, population group ratios, and so forth.

Earnings distributions measure inequality in the earnings distribution of any socio-demographic group – for example, are the earnings of men more unequally distributed than the earnings of women, or how does earnings inequality vary by province?

ALSO READ: Sars cracks down on unreported income: What taxpayers need to know

“Medians are widely used measures that best describe the distribution of earnings, as they are more stable over time,” it adds, explaining that the median would be the figure in the middle of a data set rather than the mean or average of all the values.

An average would be unduly influenced by a few large or small values.

Income gaps

Stats SA says the analysis highlights that a gender gap exists in earnings and notes that the white population group continues to earn more than four times the earnings of black Africans.

The report includes different sources of income, such as earnings by employees, earnings by self-employed persons and the total income of employers, but the analysis focused on household earnings of employees rather than total income from all sources.

ALSO READ: Basic income grant: just empty promises from government?

Earnings include remuneration in cash or in kind to an employee for work done, together with remuneration for time not worked (such as paid vacation days).

The analysis, which Stats SA says is representative of nearly 13 million employees, highlights trends in the various demographics.

Age 

The median income increases with age. At the end of 2022, the median wage for an employee aged 15 to 24 amounted to R4 300 per month, while that of a worker between the ages 55 and 65 would have been nearly 75% higher, at R7 500 per month.

The wages of younger workers have however been increasing faster than those of their older colleagues.

ALSO READ: Basic Income Grant: ANC govt considering funding options, says Lindiwe Zulu

Since 2017, earnings for the youngest workers have increased by 32% and those of the oldest employees by 25%.

Stats SA points out that one should not be surprised that most of the earnings figures are nice, round numbers. Respondents to the survey rounded their answers to the nearest R50 or R100.

Gender

The median monthly salary for men (R6 000) is higher than that for women (R4 800).

However, female employees’ earnings have increased faster than men’s – with median earnings for women increasing by 26% compared to 2017, while for men, it was 20% higher than in 2017.

This decreased the gender pay gap in that women, on average, earned 80% of what men earned in 2022, compared to 76% in 2017. In some occupations, women earn more than men.

Hours worked

Those who work more hours per week typically have higher median monthly earnings.

In 2022, those working 35 hours or more per week had median monthly earnings of R6 000, compared to their counterparts who worked fewer than 35 hours.

Men generally had higher median monthly earnings than women, irrespective of hours worked. 

Race

The report says that in 2022, the white population had the highest median monthly earnings, followed by the Indian/Asian population group.

“The median monthly earnings for the white population group was R21 000, while it was R15 000 for Indians/Asians, R5 000 for coloureds and R4 684 for black Africans.”

A closer look at the figures reveals that the earnings of black employees have been increasing much faster than those paid to other population groups.

Blacks earned 27% more than in 2017, while the earnings for whites, Indians and Asians increased by 20%.

The coloured population saw an increase in earnings of only 15%, according to the figures.

Province

Gauteng is the only province to consistently record median monthly earnings above the national average from 2017 to 2022.

In 2022, people working in Gauteng earned a median income of R7 500 per month, followed by those in the Western Cape (R5 500) and North West (R5 000). Limpopo reported the lowest median monthly earnings at R4 200.

That means that a person working in Gauteng is likely to earn nearly 80% more than a person born and raised in Limpopo, even if the latter was lucky enough to get a job in the province with the highest unemployment rate in SA.

Median incomes in Limpopo are rising faster than in Gauteng, but the difference is so small that it will take decades before they are comparable (increasing 27% since 2017 compared to earnings in Gauteng being 25% higher than in 2017).

Occupation and income

Skilled occupations obviously reported the highest earnings.

“In 2022, skilled workers earned median monthly earnings of R21 000, compared to R5 500 for semi-skilled workers and R3 300 for low-skilled workers,” says Stats SA.

ALSO READ: Basic income grant almost certain to mean higher personal tax and VAT

“Among professionals, managers and technicians, median monthly earnings were R24 000, R22 000 and R18 000, respectively. Conversely, the lowest median monthly earnings (R3 300) was found within low-skilled occupations.”

The figures show that the earnings of the lowest-paid low-skilled workers are increasing the fastest – by 32% compared to 2017, while semi-skilled workers are getting paid 15% more and skilled persons 17% more.

Income inequality

The analysis focuses a lot on the difference in earnings between men and women, with every factor (such as age, education and race) being split by gender.

ALSO READ: Why the DSD’s basic income grant report is flawed

However, the report also discloses some figures showing the huge disparity between the highest and lowest-paid groups in SA.

Some data sets include figures for the top and bottom 5%, 10% and 25% of the population – and these highlight massive differences.

For instance, the median monthly earnings figure for employees in the bottom 5% of the population are given as R1 000, versus R35 000 per month for the top 5% of the population.

Many factors will contribute to this, but the statistics indicate that a young black female from Limpopo who dropped out of high school is at one end of the spectrum, and the older white male in Gauteng with two university degrees is at the other.

This article was republished from Moneyweb. Read the original here