Unemployment, poverty and inequality

Daily Maverick

16 hours ago

Capitec's CEO argues that SA's jobless rate is as low as 10% and not 32,9% as stated by StatsSA — he's right, and the numbers are equally as wrong regarding poverty and inequality.
Capitec CEO Gerrit Fourie argues SA's jobless rate is as low as 10% and not 32,9% as stated by Stats SA – is he right? Dineo Faku of the ST reports that many don't think so. Stats SA argues their quarterly labour force survey includes the self-employed. Peter Bruce warns that 'you ignore the gut of Fourie at your peril, with 24 million customers he knows a lot more that Stats SA does'.
Clearly few have read the work of GG Alcock 'Kasinomics Revolution' who has made a career out of studying informal entrepreneurial endeavour across the townships of SA. His finding are that 'real' as opposed to 'official' unemployment does not exceed 12%.
For 30 years our unemployment, poverty and inequality conventional wisdoms, trotted out by all and sundry, have remained the same:
SA's unemployment is amongst the highest in the world
55% of South Africans live in poverty
South Africa is the most unequal society in the world.
There is no question that over the past 30 years many of the unemployment, poverty and inequality numbers have changed significantly. I am going to argue that Gerrit Fourie is more right than wrong and that the 'official stats' are more wrong than right.
1. Conventional Wisdom: SA has the highest unemployment in the world at 32,9% with youth unemployment at 45.5%:
GG. Alcock, his book Kasinomics Revolution has comprehensively researched the size of the informal sector. Here are some numbers:
Spaza shops account for R190-billion across 100,000 outlets.
The fast food sector accounts for R90-billion across 50,000 outlets.
The beauty sector accounts for R10-billion annually.
The taxi sector accounts for R50-billion a year across 250,000 vehicles.
The multi-sector is worth around R18-billion per year.
Savings stokvels are worth R44-billion per year.
The backroom rental sector in townships is worth R20-billion annually.
The spaza shop rental economy is around R25-billion per year.
And there are a multitude of other businesses in these sectors including:
Kasi building, renovations, gates, burglar guards, chrome gutters etc.
Services — plumbing, electricians, catering and event suppliers tent, toilet and chair hire.
Alcohol — taverns and shebeens.
Cultural — muti, livestock, sangoma, inyanga, unveilings, funeral.
Financial — mashonisa, stokvel, masicwabisane.
Youth unemployment at 45.5%
Mamapudi Nkgadima of Africa Response Survey writes 'To solve South Africa's dismaying youth unemployment challenge we must end the pervasive narrative that South Africans, and particularly young unemployed South Africans, are reliant on the government.
It's quite simply not true, as a recent African Response survey has revealed. Among the respondents who classified themselves as unemployed and looking for work, 41% are earning up to R15 000 a month through income-generating activities such as baking, building and hairdressing. What this shows is that many of our young people are resilient and inventive about making ends meet. We need to reinforce that and build their confidence so that that attitude catches on.'
The EY Global Shadow Economy Report 2025 confirms ours is at 26% amongst the highest globally.
Based on these numbers alone it would seem that the informal sector could be approaching R1 trillion (25% of GDP) per annum where +/- 8 million people are involved in income generating activities.
Reality Check: If these numbers are representative real unemployment is somewhere between 10 and 15%
Conventional Wisdom: 55% of South Africans live in poverty
There are three categories of poverty (The Economist):
Abject poverty: defined as 'a wretched life where people lack education, healthcare, proper clothing, hygiene, access to fresh water and shelter, and enough food for physical and mental health.'
Moderate poverty: A measure of being poor, 'poor' being defined as between a lower-bound and upper-bound poverty line,
Relative poverty: A measure of inequality, what the GINI co-efficient sets out to do.
The World Bank ranks poverty on the basis of income. In South Africa (SA), the national poverty lines are measured as the minimum amount of money you need to afford basic necessities like food and other essentials. The poverty lines are categorised as follows: the food poverty line (FPL) is R796 per month, the lower-bound poverty line (LBPL) is R1,109 per month (R4,436 for a family of four) and the upper-bound poverty line (UBPL) is R1,634 per month (R6,536 for a family of four). In 2024, it was estimated that 13.2 million people in South Africa lived in extreme poverty, according to Statista. Additionally, approximately 55% of the South African population, or 30.3 million people, lived below the national upper-bound poverty line.
But these numbers do not include government transfers, subsidies and the like — see below (using 2023 figures).
If you were to estimate the monetary value of the distributed 'income and consumption' of the above for a family of two parents/or guardians, one pensioner, and two children it would be as follows:
Child grant at R530 x2= R1,060
Pensioner foster care x 1 = R1,,180
Old age pension x 1= R2,080
Free schooling x 2 = R1,200*
Free food at school x 2 = R1,000*
Subsidised school transport x 2 = R400
Subsidised water = R300*
Subsidised electricity = R300*
Subsidised housing = R1,200*
Total = R8,720 per month per household, before any earned income is added!
* Here are my estimates of the monetary value of these benefits/subsidies as consumption.
Therefore, to claim that 55% of South Africans live below the upper-bound poverty line and that 22% live in extreme poverty cannot be defended in terms of the numbers above.
Reality check: If the above numbers were included in the calculation of poverty, would it change the 'stats'? I would submit that 10% of our population would be defined as living in abject poverty (Economist) with 35% living in moderate poverty (poor).
Conventional wisdom: South Africa is the most unequal society in the world.
The GINI co-efficient, the measure of inequality, is defined as 'measuring the extent to which the distribution of income or consumption among individuals or households within an economy deviates from a perfectly equal distribution. A Gini index of 0 represents perfect equality, while an index of 1 implies perfect inequality'.
Our score, which hasn't changed over 30 years, is between .61 and .65 and states that our income inequality is among the 'worst in the world'.
Definitions
Would it be fair to argue that the distribution of 'income or consumption' includes all the income a household receives no matter the source, both earned and unearned; and that consumption is of all that is used by the household, whether as a result of government transfers and free services, or personal choice.
SA over the past 30 years
According to the 2024 South Africa Survey published by the Institute of Race Relations, expenditure on social services has risen from R63-billion (1995) to R1.27-trillion (2023), a 1,900% increase in nominal terms (at 5% inflation over 30 years R63-billion would have risen to R272-billion — a 330% increase).
The number of formal houses has trebled in the last 30 years, 60% of which are owned.
So do the sums!
8 million people working in the informal sector with 41% of unemployed youth hustling at R15 000 per month.
Government transfers have increased from 2,046702 recipients in 1996 to 18,829716 in 2023.
Child support grants increased from 0 in 1995 to 13,147937 in 2023.
There are 15 372 000 formal housing structures, 90% of which have access to electricity and water (with four people to each household that would account for 61488 000 citizens with permanent shelter.
A family of two kids, two guardians and a Gogo would access approximately R8,000 in government transfers.
CONCLUSION
So the question is, why are reputable organisations, think-thanks, research houses, political parties, NGO charities, labour unions and Stats SA constantly reminding us that we are the most unequal society in the world, that poverty remains stubbornly high at 55%, and that unemployment is on the rise at 32.9%?
Is it a government agenda, aimed at justifying BBBEE, Equity legislation, grants and a welfare state – all in the pursuit of justifying the National Democratic Revolution?
Is it a think-tank agenda, aimed at proving that 30 years of ANC rule has delivered nothing?
Is it an NGO agenda, sticking to the 'old' numbers to justify their 'current' needs?
Is it a labour union agenda, using apartheid legacy 'numbers' to defend non-CPI related wage demands?
Is it a Stats SA agenda aimed at justifying the spend on government transfers and grants?
I'm not for one minute suggesting that unemployment, poverty and inequality are not fundamental challenges bedeviling transformation and hampering redress in South Africa. But I am suggesting, as does Gerrit Fourie, that the numbers reflect our changing reality and that there has been positive upward movement which the official stats do not represent.
We need more people like CEO Gerrit Fourie, author GG Alcock, researcher JP Landman, think-tank The Institute of Race Relations who are doing the research, digging up the facts, calling out the numbers to shout louder and change our current conventional wisdom madness. DM