A better life for all? Poverty trends in South Africa

Alex | Sep 30, 2009
A recent Sunday Times interpretation of the latest AMPS statistics is challenged by Lawrence Schlemmer.

Good news about progress in South Africa is precious. It was of very great interest, therefore, when the Sunday Times of April 28 analysed findings from the very large All Media and Products (AMPS) surveys of the SA Advertising Research Foundation and concluded that “We live in a society that works and is continuing to improve”. One wishes fervently that this were the case.


The findings quoted did indeed provide valid evidence of some impressive progress in living standards. The Newspaper reported that proportions of people in the very lowest category of the Living Standard Measure (a combined index of possessions and socio-economic characteristics called the LSM) had fallen from nearly 20% in 1994 to 5% in 2001.


But the newspaper’s interpretation of the evidence was quite stunningly one-sided. With its headline — “Quiet revolution improves lives of all” — it made light of very worrying aspects of the findings that were presented as no more than a caveat, in particular an increase in the proportion of poor people living below the breadline of no less than 12 percentage points. Clearly a fuller interpretation of these important findings is necessary.


Household incomes over time

The AMPS surveys are among the more consistent and reliable indicators of socio-economic conditions in South Africa. They are large (up to 30 000 respondents), fully representative of the population and the comparable AMPS surveys each year provide reliable estimates of changing household incomes; gross pre-tax income from all sources. The results of various AMPS surveys between 1989 and the latest 2001 survey have been consulted to establish the proportions of households living in poverty.

Incomes tend to be understated in all surveys, but the benefit of using a single source of data over time is that the biases are reasonably consistent and the trends that they reveal are reasonably reliable. Starting in early 1989 and going up to late 2001, the following results present the proportions of households in different population groups with total incomes less than an average poverty line. In 1988 the Bureau for Market Research of the University of South Africa estimated the Minimum Living Level for typical African households at R427 per month. Allowing for some underreporting of income, a benchmark of R400 is taken as the poverty line in 1989 and thereafter adjusted for inflation, raising it to R1270 per month in late 2001. Political correctness notwithstanding, the results are given according to population group, and the figures themselves show that race, regrettably, remains a critically important variable.

These results are broad indicators. Greater precision would require that the proportions be based on time-consuming individual calculations of the minimum living levels for the specific composition of each household, but this approach does not usually lead to different conclusions.

The most striking aspect of the findings is the relative increase in poverty among African households after 1993, coinciding with a much more widely publicised rise in unemployment. Among coloured and Indian people there appears to have been initial improvement but here as well, we see a rise in poverty after 1997. There may also have been a marginal increase in serious poverty among white households but in 2001 it affected only roughly 165 000 white adults compared with more than 13 million Africans. The key finding is that proportions of African households below the breadline have risen from around 50% to close on two-thirds.

The AMPS surveys also allow one to assess the proportions among the race groups that have achieved broadly “middle class” status, living in relative comfort with household incomes of roughly R8000 per month and above. The results (not presented in table form) show that accompanying the increases in the proportions of Africans and coloured people below the breadline, are also increases in the proportions in the middle classes. In other words African and coloured households have become both poorer and more prosperous at the same time, as it were.

Among Africans the proportion in the middle classes is admittedly still relatively small but not so in absolute numbers. Calculating from the survey results for 2001, just under one million African adults were in the categories above R8000 per month compared with nearly 3 million whites, coloured people and Indians. Nonetheless, there is real progress towards equality at middle class levels: in 1997, of the total numbers of South African adults in the lower middle class and above, some 16% were Africans, but by 2001 the proportion had risen dramatically to 24%. Over the same period of only four years, the white proportion of the total middle class fell from 71% to 61%.

Does this mean that overall racial inequality has diminished? Various analyses of census results have shown a steady reduction in black-white income inequality up to 1996. The AMPS results also show this but there is a twist in the tail. Calculating from the AMPS surveys one is able to compare average household incomes for the different groups over time as a ratio of average African to white household income. If one takes the average African income as 100 in each year, the average white incomes are noted in Table 2.

Hence while the average white to African household income gap was over six to one in the late eighties, it fell to under five to one by 2000 but then rose to slightly over five to one by 2001. One requires more surveys to confirm this latest shift, but on the face of it, the trend towards overall racial income equality has stalled.

The fact that there is both an increase in poverty and an expansion of the middle class adds up to a quite dramatic increase in general inequality in the society, irrespective of race. These trends are mitigated somewhat by the effects of taxes in the better-off households (not recorded in the surveys) but the direction of the trends would not be altered.


Living standards over time: a mixed blessing

As the Sunday Times article made clear, one must also consider the estimates of living standards (LSMs), based on type of housing and whether or not households have electric appliances, telephones, motor vehicles, servants, electricity, hot running water, flush toilets, insurance policies, credit cards, retail accounts and the like. In the results below the LSM ratings of South African households are presented for 1997 and 2001, in combined categories of the four lowest and four highest living standards (the weights and categories used are those standardised for 1993 to allow comparability).

When the results for living standards are compared with those for household income given earlier, it is clear that the very poor, although expanding, seem to have improved their standards of living — or have they?

They increasingly have very small modern houses along with gadgets, water, electricity and telephones. One must recognise the achievements of government in all this, but these new acquisitions all imply monthly costs — burdens that are hitting households with less and less income. The effects of this are seen in spreading non-payment of service charges, accounts, bond default and massive levels of repossession. A recent study by David McDonald in a HSRC book shows that non-payment has led to no fewer than 10 million people affected by water disconnections, an equal number by electricity cut-offs and two million by evictions from houses, leading to a rise in protest and some violent confrontations with the authorities (Sunday Independent, 28 April 2002, see also Focus 25).

The bitter irony, therefore, is that the sixty percent of African households and very many coloured and some Indian households below the poverty line are being additionally squeezed by the very service roll-outs that are supposed to provide a better life. This squeeze on the poor extends to hidden and more disastrous consequences like a deterioration of family diets and children going to school on breakfasts of dry bread and tea.

The Sunday Times editorial was premature — we are not yet winning the war on poverty. In fairness to government, it is not for lack of trying. The failure is due to deepening unemployment and to a freely admitted lack of human resource capacity in the administration. The harsh fact is that as we prepare to host the World Conference on Sustainable Development and to take the lead in the NEPAD initiative, we cannot honestly claim to be leading by example. The past decade has brought both a better and a tougher life for most.