Gini Coefficient
According to Statista, South Africa has the highest income inequality in the world, with a Gini coefficient of around 0.63. What does this mean?
*The main driver behind the “unacceptably” high Gini is the fact that large numbers of South Africans are unemployed.
Unemployment
**According to the latest Quarterly Labour Force Survey, the rate of unemployment in South Africa, for the 1st quarter 2025, was estimated to be 32.9% and if we include discouraged workers, the unemployment rate increases to 44.1%.
An even greater concern is the unemployment rate among young people aged 15 to 24, which stands at a staggering 62.4%. This means 8.2 million people are unemployed. I need to repeat 8.2 million people are unemployed.
Pay Gap
Why, then, is so much attention being placed on the pay gap between the highest and lowest paid employees as a solution to reducing poverty in South Africa? Yes, paying the lowest paid more would help, but if this if pushed too high without a concurrent increase in productivity, companies will have to think very carefully before hiring more lowest paid employees.
However, this will not address the main driver of the unacceptably high Gini coefficient. What is needed is a reduction in the unemployed. So why don’t we focus on the reasons for the high unemployment and stop using the pay gap and “excessively” high executive pay to detract attention from the real problems?
I won’t go into exploring the answers to the questions on why the unemployment rate is so high or why executive pay is used to remove the focus from this problem. Those are the questions we all should be thinking about.
*15 September 2023 – Imraan Valodia Pro Vice-Chancellor: Climate, Sustainability and Inequality and Director: Southern Centre for Inequality Studies., University of the Witwatersrand which provides support as a hosting partner of The Conversation AFRICA
**Business Day 13 May 2025 – 12:21 UPDATED 13 May 2025 – 23:14 by Jana Marx