Wage Gap Between Rich and Poor Widens – September 2009

The Wage Gap between the Rich and the Poor has widened in South Africa

The gap between the rich and the poor in South Africa has grown, according to a recent report by Haroon Bhorat, economics professor at the University of Cape Town. Bhorat reports that South Africa’s Gini coefficient index currently stands at 0.679. The coefficient has risen from the All Media and Products Survey of 0.66 in 2007. The index shows the level of income inequality. Bhorat’s figures are based on Statistics South Africa’s income and expenditure survey which draws on household income in the 2005/06 year. 

The Gini coefficient index shows the level of income inequality. Within the index, a value of one reflects complete inequality while a value of zero reflects complete equality. A value above 0.5 is “unacceptably high”. In comparison, World Bank figures for 2007/8 put Brazil at 0.57, Bolivia at 0.601 and Botswana at 0.605. 

In figures, the difference between high wage earners and workers’ salaries in South Africa can often be immense – according to the 2008 Bargaining Indicators report released by the Labour Research Service, CEOs of large companies on average earned 298 times more than an ordinary worker. Put another way – it would take that low wage worker more than six lifetimes to earn what a CEO earns in one year in South Africa.

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