Answer to Question #243153 in Macroeconomics for Precilla

Question

Discuss inequality in South Africa

Answer 1

High unemployment is the main factor behind inequality levels in South Africa. It is noted that youth unemployment exceeds 50%. Creation of more low skilled jobs to improve labor participation is needed especially in the poorest provinces.

Inequality has remained constantly high from the 1990s when it was elevated by the fact that the policy of apartheid excluded a large portion of the population from economic opportunities.

Income distribution in the country remains highly skewed such that the top 20% of the population holds over 68% of income while the bottom 40% of the population only holds 7% of income.

Significant disparities also remain across many regions in South Africa. Per capita income in economically grown provinces is almost twice the level found in other provinces. Subdued growth has jeopardized efforts to promote inclusion. The economy has not yet created enough jobs to absorb the unemployed and new entrants to the labor market due to stagnation of growth over the past decade.