The prevailing call for the transformation of South Africa into a developmental State should not be considered a silver bullet for the country’s enduring socioeconomic inequality and poverty alleviation issues.
Addressing attendees at the memorial colloquium of the assassination of writer and activist Ruth First, in Johannesburg, last month, Mapungubwe Institute executive director Joel Netshitenzhe stressed that, while high rates of economic growth, coupled with lower unemployment levels, may reduce absolute poverty, it would not impact on the lasting challenge of inequality.
“South Africa represents extreme manifestations of inequality, which are far more prevalent and systematic than in other States. This reality, coupled with the historical racial and class features of our society, makes it a highly complex issue,” he said.
Netshitenzhe said that interracial inequality had decreased during the first decade of South Africa’s democracy, as black South Africans were able to break through the glass ceiling of apartheid.
However, intragroup inequality within the black community increased in parallel, as only a fraction of its members were able to exploit the new opportunities.
Moreover, once the base effects of democracy had manifested during the first decade, interracial inequality widened from 2004 to 2009 during a period of high economic growth.
“This was a direct result of the rich being better positioned to take advantage of a burgeoning economic sector than the poor,” he noted.
While Netshitenzhe accepted that higher rates of economic growth and increased labour absorption mechanisms, as encouraged in the developmental State model, would reduce absolute poverty, he believed that an activist State, as an instrument of redistribution, was required to reduce relative poverty, or inequality levels.
He said that this approach would include the absorption of marginalised groups into economic activity, the provision of free and good- quality education as well as dedicated skills development efforts.
In addition, South Africa would be required to institute free or subsidised high-quality public services for the poor, place restrictions on executive remuneration packages to boost the distribution of wealth and implement a minimum wage policy and inflation limit.
“Progressive taxation would also go some way towards addressing inequality, but for this system to retain legitimacy, the efficiency and ethical conduct of the State, particularly in the administration of the higher income brackets, are paramount,” he pointed out.
He added that measures to address spatial settlement patterns in relation to areas of high economic activity were also required.
Netshitenzhe said that dealing with inequality entailed a reversal of South Africa’s ‘trickle up’ economy, in which the perpetuation of vastly divided socioeconomic classes was observed, and cited a recent statistic in support of this statement.
“Twenty per cent of the poorest citizens of this country earn only 2.3% of the national income, while 20% of the richest earn 70% of the national income,” he concluded.