Abstract

JOUBERT, Fanie  and  ROSSOUW, Jannie. Living standards: An economic perspective on quality of life in South Africa. Tydskr. geesteswet. [online]. 2013, vol.53, n.1, pp.89-108. ISSN 2224-7912.

This research provides an economic perspective on living standards in South Africa against the background of domestic and international initiatives to eradicate poverty and inequality. In general living standards and quality of life are multidisciplinary topics in which numerous factors such as medical care and advancements, housing, food resources, etc., also play an integral part. This research makes the assumption that living standards are a prerequisite for quality of life. The methodology is thus to analyse a number of economic indicators often used in the assessment of living standards. As far as poverty amongst South Africans is concerned, the research finds that although absolute poverty decreased as a percentage of the population between 1996 to 2010, relative poverty decreased only marginally over the same period. Absolute poverty is measured as the number of people living on less than US$2 per day, and this share of the population decreased from 12,1% in 1996 to 5,0% in 2010. Relative poverty takes into account factors such as cost of living as well as the size of the household. Relative poverty recorded a marginal decrease from 40,6 % of the population in 1996 to 39,9% in 2010, and was therefore not as pronounced as the decrease in absolute poverty. Income distribution can be assessed using the Gini-coefficient, which compares the cumulative percentage of income earned by various cumulative percentages of the population. Income distribution in South Africa has improved only marginally since 1993, as indicated by Gini-coefficient readings of 0,67, 0,68 and 0,66for the years 1993, 2000 and 2008, respectively. This implies that despite the government's various poverty reduction measures, income distribution still remains stubbornly skewed. South Africa's government revenue will be an estimated R800 billion (excluding non-tax revenue and SACU payments) during the 2012/13 financial year. The main sources of revenue are personal income tax (R295bn. or 34,6% of the total), value added tax (R209 bn. or 25,4%) and company tax (R166 bn. or 20,3%). The number of tax payers per category is around 6 177 050 individuals, 2 078 182 companies and 326 649 trusts. A closer analysis of the personal income tax category indicates that 72,9% of this item is paid by individuals earning less than R260 000 per year, while 95,5% is paid by individuals earning less than R600 001 per year. As for the division of state revenue, social development will receive an estimated R112bn. during 2012/13, of which the bulk will be allocated to the social assistance (R104bn) sub category. Around 16,1 million South Africans currently (2012/13) receive some form of grant, with the biggest categories (by numbers) of recipients receiving the child support grant (11,3 million) and the old age grant (2,7 million). The number of personal income taxpayers increased on average by 4,4% between 2008 to 2012. Compared to this, the number of grants paid rose by 5,3% during the same period. More alarming is the cost of these grants (social assistance payments) which rose by an average 10,4% over the period. These large short term discrepancies raise serious questions about the sustainability of these items in the long term. The South African population rose from 5,9 million people in 1911, to 40,5 million in 1996, while Stats SA estimates that there were 50,6 million people during mid-2011. The population growth rate indicates some deceleration from around 2,2% per annum during the 1990s to a growth rate of 1,3% per annum, for the period 2007 to 2012. The age profile of all South Africans indicates a clear pyramid shape, with the age groups between 0-19 years forming the base of the pyramid. Despite this, the South African population is showing signs of aging. In 2010 around 5,6% of the South African population was 65 years or older, placing the country in the "mature/] intermediate" category. Projections are that by 2020 more than 7,6% of the population will be 65years or older which will justify a reclassification to "old". As far as life expectancy is concerned, the Actuarial Society of South Africa and the Institute for Future Research estimated values of 58,2 and 50,8 years, respectively, for 2010. Both of these entities expect life expectancy to improve, with estimates of 59,1 and 51,3 years, respectively, for 2025. The research indicates that a large burden of financial support to the greater economy is being placed on the shoulders of the middle income class in South Africa. This burden, rather than job creation, eradicated absolute poverty. Adding to this is the need for sufficient retirement planning, which currently seems to be left somewhat to faith. South Africans in general, and the middle income group especially, have to realign their consumption and expenditure trends during their working lives, to limit a decrease in living standards (and thus quality of life) post retirement.

Keywords : Living standards; quality of life; poverty; income distribution; tax burden; social spending; population; age profile; retirement provision.

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