The post-apartheid evolution of earnings inequality in South Africa, 1995-2004

Obstacles to enhancing equity and social justice in South Africa

By: Leite P, McKinley T & Osorio G
Published by: UNDP International Poverty Centre (IPC) , 2006
Via: Eldis

Understanding earnings inequality is a major part in understanding the inequality in total income in South Africa, where earnings constitute the main component of income. This paper describes the evolution of earnings inequality in South Africa from 1995 to 2004.

By combining datasets, the paper finds that inequality in earnings rose sharply during 1995-1999, then declined marginally but remained high during 2000-2004. The driving force for the increased inequality in the 1990s is thought to be a dramatic rise in unemployment at the time. This rate in joblessness has since remained relatively high, with downward pressure on real wages since the arrival of new entrants to the formal labour market.

Earnings inequality remains high across groups of workers differentiated by race, education and occupation. Disparities in real wages between rural and urban residents, and by province, has also intensified. Whilst the country's dependence on export-led growth has benefited higher income workers (with better education and skills), the great majority of workers have been left behind. This has served only to reinforce existing inequalities.