The Working Poor in South Africa, 1997-2012

TL;DR: In this article, the authors examine trends in the rates of working poverty at various poverty lines, as well as trends in respect of employment amongst the poor, the depth of poverty, sources of income, and selected aspects of household composition.

Abstract: Despite the intentions of government and commitments by its social partners, South Africa continues to experience one of the highest levels of income inequality in the world and almost half of its households live below the minimum living level used by the National Planning Commission. Persistent calls for deregulation and lower wages to encourage job creation have been countered by arguments that the depth of income poverty and the extent of income inequality require consolidation and deepening of gains made by working people since 1994 and as expected in terms of international commitment to the International Labour Organisation’s (ILO’s) Decent Work Agenda. It is in this context that we undertake a closer examination of the shifts in the patterns of working poverty over the period 1997-2012. Challenges in calculating the rate of working poverty include defining the poverty line(s) to be used, and linking data on household incomes and individual employment status. We analyse data collected by Statistics South Africa through its October Household Surveys in 1997-1999 and General Household Surveys in 2004-2012, to examine trends in the rates of working poverty at various poverty lines, as well as trends in respect of employment amongst the poor, the depth of poverty, sources of income, and selected aspects of household composition. Our analysis shows that although the rate of working poverty decreased during the period under examination, 14% of workers still lived in households below the lower bound official poverty line, more than a fifth lived below the upper bound official poverty line, and more than a third of workers lived in households with just enough income to cover the minimum of their most basic needs. The poverty gap decreased for the working poor and for the poor in general, with the expansion of social grants in the early 2000s playing a role. We find that changes in the labour market over the post-apartheid period have not added appreciably to the demonstrable income effects achieved through the expansion of the social grant system. The implications of these findings for labour market regulation and social policy are briefly considered.