Poverty and inequality after apartheid

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Centre for Social Science Research

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University of Cape Town

Democratic South Africa was born amidst high hopes for the reduction of income poverty and inequality from their high levels under apartheid. The reality has been disappointing: despite steady economic growth, income poverty probably rose in the late 1990s before a muted decline in the early 2000s, income inequality has probably grown, and life expectancy has declined. The proximate causes are clear: persistent unemployment and low demand for unskilled labour, strong demand for skilled labour, an unequal education system, and a social safety net that is unusually widespread but nonetheless has large holes. It is also clear that economic growth alone will not reduce poverty or inequality. Pro-poor social policies are important, but not as important as a pro-poor economic growth path. Unfortunately, there is little sign of the political conditions changing to push the state towards the promotion of a more pro-poor pattern of economic growth. There is some chance of parametric reforms of the welfare state. Overall, however, it is likely that, after another ten years of democracy, unemployment and poverty rates will remain high, despite significant redistribution through cash transfers, and incomes will continue to be distributed extremely unequally.