The Present as a Legacy of the Past: The Labour Market, Inequality and Poverty in South Africa

Abstract

This paper provides an analysis of poverty in South Africa by focussing on the labour market. It seeks to understand inequality and poverty in contemporary South Africa by analysing the main factors that have contributed to these socio-economic outcomes. The paper shows that poverty and inequality are still widespread in South Africa, and have their origins in the labour market. The labour market in South Africa has been shaped by particular historical factors, which are discussed within the paper. This allows for an understanding of the constraints and possibilities for redistribution.

The paper utilises a class of poverty measures to determine the potential cost to the fiscus, in 1995 Rands, of alleviating poverty in South Africa. The simulations are undertaken for both households and individuals in the society, by the different covariates of poverty. The study finds that the commitment required from the state to reduce poverty, is fairly modest, albeit within the realm of very strict assumptions. In addition, the paper illustrates that individual and household level data imparts differential poverty information, which is important for policy prescriptions. Finally, it is evident that for state targeting purposes, the nature of household poverty is fairly easily reduced to a small sub-group of labour market defined household types.

Keywords: household types, poverty, poverty measures