How South Africans Generate An Income

A new report by Standard Bank provides some insights into the consumer trends in South Africa – highlighting the stark income inequalities among the country’s people.

Using data from the Bureau of Market Research (BMR), Standard Bank finds that the low income groups in SA are heavily reliant on the government for social grants (around 40%).

The middle income groups rely mainly on salaries and wages (60% – 70%) while the upper income group relies on salaries and wages (33% – 61%), net profits (21% – 30%) and investments (5% – 32%) as their main sources of income.

Approximately 25% of the total South African population depend on income from salaries as their main source of income. The total income contribution of these individuals is 66%.

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Around 23% of the total South African population depend on the government for their main source of income. The total income contribution is around 6%. This ensures secure spending which is not cyclical in nature, however, this is a large expense for the South African government.

Around 3% of the population report net profit as their main source of income, but the total contribution to income is 13%. This highlights the large returns that are possible from entrepreneurial ability.

The lowest income group is described as the following: people who earn between R0 – R11,600  annually, while middle class people are described as earning between R109,001 – R783,000.

Those in the affluent bracket earn between R783,001 – R1,693,001 and above.

Black South Africans are predominantly employed in lower income groups, while, on the other hand white and Indian/Asian South Africans are predominantly employed in higher income groups.

There is also a noticeably higher employment rate of White South Africans who are over the age of 65, Standard Bank said.

Additional findings from Standard Bank:

  • The probability of being in a lower income group with no schooling is 93%, with a matric its 62% and with a tertiary education, the probability of being in a lower income group is only 47%.
  • On the other hand, the probability of being in a higher income group with no schooling is 0.3%, with a matric its 2.2% and with a tertiary education, the probability is only 4.1%.
  • If an individual lives in a more urbanized province such as Gauteng, the probability that they are in a higher/middle/lower income group is 1%, 21% and 78%. This is better compared to a less urbanized province such as the Northern Cape, where the probability that they are in a higher, middle or lower income group is 0.7%, 16% and 84%.
  • If one is unemployed, the probability of being in a lower, middle or high  income group is 93%, 7% and 0.3% compared to if one is employed, where the probability of being in a lower, middle or high  income group is 72%, 27% and 1%.
  • If one is female, the probability of being in a lower, middle or high  income group is 84%, 15% and 0.7% compared to if one is male, where the probability of being in a lower, middle or high income group for a male is 78%, 21% and 1%.
  • If one is Black, the probability of being in a lower, middle or high  income group is 86%, 14% and 0.6% compared to if one is White, where the probability of being in a lower, middle or high income group for a male is 65%, 33% and 2%.
  • The older an individual, the higher the probability that they are in in a higher income group.

source: Business Tech

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