SA inequality grows
Cape Town. — New research has found that inequality in SA has increased with wealth becoming ever more concentrated among the rich. According to the World Inequality Lab, SA is one of the world’s most unequal countries, with 10% of earners capturing 66 percent of the national income.
“For the first time ever, this report examines how global growth has been shared among individuals in the entire world since the 1980s, with a particular focus on emerging countries where inequality data had previously been sparse or non-existent,” said Thomas Piketty, co-ordinator of the report.
Data from organisation showed that in SA, the top 1 percent of earners held 8,8 percent of SA’s wealth in 1987, and had increased their share to 19,2 percent by 2012. The report found that wealth inequality had grown most rapidly in North America, China, India, and Russia, while remaining stable – albeit at high levels – in sub-Saharan Africa.
Average South African income
“The fact that inequality trends vary so greatly among countries, even when countries share similar levels of development, highlights the important role of national policies in shaping inequality,” said Lucas Chancel, general co-ordinator of the report.
“For instance, consider China and India since 1980: China recorded much higher growth rates with significantly lower inequality levels than India. The positive conclusion of the World Inequality Report is that policy matters, a lot,” Chancel added.
The report found that average South African income (in dollar terms) increased from $15 437 in 2000 to $18 578 in 2011, but then declined to $18 079 by 2016. The results match a recent Oxfam SA report that found just three South African billionaires had more wealth than the bottom half of the country’s earners. Those three were identified as retail tycoon Christo Wiese, Glencore CEO Ivan Glasenberg, and Aspen Pharmacare chief executive Stephen Saad.
However, the Oxfam SA figures date from January 2017, before the Steinhoff debacle wiped out a significant portion of Wiese’s wealth. The World Inequality Lab linked wealth inequality to tax avoidance by wealthy individuals.
“The establishment of a global financial registry to record the ownership of financial assets would deal severe blows to tax evasion and money laundering, and would enhance the effectiveness of progressive taxation, which is an essential tool in reducing economic inequality,” said report co-ordinator Gabriel Zucman.
Global wealth inequality looks set to continue its current trajectory if global economic policies remain in place, said the organisation.
“The combination of privatisations and increasing income inequality has fuelled the rise of wealth inequality —within countries and at the global level, private capital is increasingly concentrated among a few individuals. This rise was extreme in the US, where the share of wealth held by the top 1 percent rose from 22 percent in 1980 to 39 percent in 2014,” said Emmanuel Saez, co-ordinator of the report.