Will the working class ever be able to join the middle class?

South Africa’s working class will not find it easy to break into the middle class, although it is now the fastest-growing segment in the country. Millions of households have moved up from poverty or the working poor, but the next step will be very difficult, as breaking into the middle class has become significantly more challenging.

According to a recent study by the UCT Liberty Institute of Strategic Marketing commissioned by Liberty and Standard Bank, 1.2 million households joined the working class in the past decade. This segment is defined as households earning between R8 000 and R22 000 per month.

These households represent a quarter of South Africa’s population and largely consist of individuals with some tertiary education. Despite some having the benefit of dual incomes, their earnings remain below R22 000. Low economic growth, high debt and limited resources hinder their upward mobility, Motlatsi Mkalala, executive head of Middle Market at Standard Bank, says.

“Formal education helped many people move towards the middle class, but the working class faces a highly unstable journey. Retrenchments, short-term work contracts, or a breadwinner’s death can quickly push households back into poverty.”

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Working class has spending power of R550 billion

Despite a combined annual spending power of R550 billion and 300 new working-class households emerging daily, per capita spending remains low as many of these households support extended family and spend more on essentials such as food as inflation remains high, Mkalala says.

Commuting is a heavy burden, with many spending an average of two hours daily on travel. For some, this time has doubled, in line with their transport costs. To cope, many turn to debt, and as a result, only 34% of working-class consumers surveyed feel financially stable, compared to 69% of middle-class earners.

“These challenges show the need for accessible tools that provide real-time insights into spending habits and help the working class make informed daily financial decisions,” Mkalala says.

He points out that the research also highlights the need for sustainable credit solutions to protect this segment from exploitative lending. “The working class wants to get out of debt, own homes and secure better futures for the next generation. However, many are forced to put these aspirations on hold due to unexpected life events.”

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Number of poor people decreasing?

According to the research, the number of poor people (with an income up to R3 500 per month) in the country decreased by 37% from 27 million in 2012 to 17 million in 2022, while the number of working poor people increased by 58% from 12 million in 2012 to 19 million in 2022. The working class increased by 66% from 9 million in 2012 to 15 million in 2022.

When it comes to buying power, poor people’s spending increased by R35 billion from R130 billion in 2012 to R165 billion in 2022, while working poor people spent R195 billion more, from R140 billion in 20212 to R335 billion in 2022. The working class’ spending increased by R270 billion from R280 billion, in 2012 to R550 billion in 2022.

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More interesting numbers about the working class

In addition, the report shows that:

• One in every six South Africans works in the informal sector
• Almost 80% of the 1.4 million informal enterprises are one-person firms
• More people are employed in the informal sector than the mining sector
• The large proportion of enterprises are located at owners’ homes and are largely integrated into the household
• 40% of South African adults borrow money to buy food
• 36% of credit-active consumers have impaired records, and nearly 70% of loan applications are rejected
• Only 12% of South Africa’s mass market have access to the internet at home other than through the cell phone
• 21% have a computer at home.