Despite talk that South Africa is facing a serious economic decline, incomes of its citizens have risen substantially since the country’s first all-race elections in 1994.
These have been boosted by the country’s black economic empowerment (BEE) policies and employment equity legislation which was introduced soon after the fall of the apartheid government.
These laws have seen black people own stakes in listed companies and get paid salaries that are equal to their white counterparts.
The uninterrupted rise in living standards was also driven by welfare payments and the provision of social services ranging from housing and electricity to water, sanitation, healthcare and education.
The rise in incomes was also aided by counter-cyclical government spending (job creation and “real” salary increases). The rise in incomes was also aided by counter-cyclical government spending (job creation and “real” salary increases).
Annabel Bishop, Investec Group economist, on Thursday said South Africans had become more affluent (on average).
“Income per capita has risen in real terms, to 38.734 rand ($4) per annum from 27.866 rand ($3) in 1994,” Bishop said.
“This has pulled household consumption expenditure to 1.2 trillion rand ($134 billion) a year, as more South Africans are included in the formal economic net.”
The estimated income per person in South Africa has risen more than four times (including inflation) to 57.234 rand ($6) per year, from 12.281 rand in 1993.
Bishop found that household debt as a percentage of disposable income was also rising.
“The short-term debt-servicing capacity of the private sector should continue to be enhanced by the relatively low interest burden for those who are not over indebted.”
She said the SA Reserve Bank was unlikely to hike interest rates this year.
High unemployment rates, low savings and high debt levels continued to impact negatively on the household sector.
She expected household consumption expenditure (HCE) growth to remain moderate this year at 3.3 percent year-on-year.
High price increases will limit consumer spend.