FW de Klerk Addresses the Challenge of Inequality in the Annual Barry Streek Lecture to the Cape Town Press Club
FW DE KLERK ADDRESSES THE CHALLENGE OF INEQUALITY IN THE ANNUAL BARRY STREEK LECTURE TO THE CAPE TOWN PRESS CLUB
Issued by the FW de Klerk Foundation
In his speech on 6 September FW de Klerk addressed South Africa’s failure to promote equality since 1994. He believed that it was an appropriate topic because questions relating to equality were seldom far from the heart of the political debate.
Citing the killing of 34 miners two weeks ago at Marikana as an example, he said that the incident was immediately and incorrectly interpreted as yet another manifestation of South Africa’s inequality crisis.
However, the average cost to the company of the miners’ package was already R11 400 - and miners were due for an increase of up to 10% in October. This gave them a monthly package of US $2 000 per month on a purchasing power parity basis. This was more than the average wage in countries like Israel, Poland and the Czech Republic, and twice as high as wages in competitor countries like Chile and Malaysia. It is also higher than earnings of 50% of white South Africans.
De Klerk observed that the relevant wage divide was not the unacceptable gap between Lonmin workers and their Chairman in London. It was the fact that Lonmin workers had incomes that were 20 times higher than their unemployed neighbours in Marikana.
South Africa’s dismal failure to achieve greater income equality was reflected in the fact that its Gini index had deteriorated from 66 in 1996, to 70 in 2008. De Klerk said that in the most equal countries in the world - Japan, Sweden and Denmark - the top 10% earned only six times as much as the bottom 10%. By contrast, the top 10% in South Africa earned 110 times more than the bottom 10%.
It was with this degree of inequality in mind - much of it the result of discriminatory policies of the past - that the framers of the Constitution had drafted Section 9(2) - which had subsequently become the fountainhead of affirmative action and BEE programmes.
De Klerk was critical of the 2004 Constitutional Court judgment in Minister of Finance vs Van Heerden which had ruled that, “If a measure properly falls within the ambit of section 9(2) it does not constitute unfair discrimination”. The judgment had arbitrarily dispensed with sections 9(3) and 9(5) which prohibited unfair discrimination by the state and ruled that discrimination was unfair unless it was established that it was fair.
In De Klerk’s view the judgment had seriously diluted the non-derogable right to non-discrimination and undermined the foundational value of non-racialism. Ironically, it had also diluted the right to equality.
However, it was clear that the government’s affirmative action and BEE policies had failed to address equality - because they affected only the top 10 to 15% of the income pyramid and had little or no impact on the bottom 85%.
De Klerk pointed out that although whites were still the most privileged community the situation was changing. “In 1995 whites accounted for 69% of those in the top earnings decile. By 2007 their share had diminished to 43%.”
Also, levels of inequality within the white community were about the same as in most Latin American countries. 25% of whites earned less than R5 000 per month and 34% did not have matric. “This means that there are some nine million black, coloured and Indian South Africans who have higher incomes and education levels than more than a million whites.”
Clearly, when black, coloured or Indian candidates from the privileged education and income group were “advanced” over white candidates from the less privileged group, the result did not “promote the achievement of equality”. “It is simply unfair racial discrimination and points to the injustice and irrationality of using race as the determinant of advantage and disadvantage”.
De Klerk said that a recent study by the World Bank had identified some of the roots of inequality. It had found that inequality of opportunity among children was affected by personal and family-related factors and access to quality education, health care, and essential infrastructure.
In terms of these criteria, white children had enormous advantages: “83% come from two-parent households with relatively small families. They live overwhelmingly in urban areas and have access to good education and health services.”
By contrast, only 30% of black children came from double-parent families. 859 000 were double orphans and 98 000 live in child-headed households. The great majority lived in rural areas, informal settlements or townships with little access to decent schools and health care.
De Klerk identified poor education and high unemployment as the other major causes of inequality. Children fared very badly in Grade 3 and Grade 6 numeracy and literacy tests. 60% left school without a matric and those who passed matric did so with an average mark of less than 40%.
Although the official unemployment rate was 24.9%, the real problem was that only 36.8% of black South Africans between the ages of 15 and 64 were employed - compared with 63.2% among whites. Only 34.5% of the potential workforce was involved in formal employment - and only 19% paid PAYE or SITE taxes.
The main inequality divide was no longer between blacks and whites but between unionized and employed workers on the one hand - and the 40% of the population that are unemployed on the other. “The government should accordingly be concentrating its efforts to promote equality on job creation and the provision of decent basic education, training, security, housing and health services”.
De Klerk referred to a recent study which revealed that between 2001 and 2011 there had been an impressive improvement in the living conditions of the poorest segments of our society. The number of people in the lowest four LSMs had dropped from 52.6% to just 24.4% - due almost entirely to the enormous increase in social transfers. The problem was that such transfers were unsustainable - and held the danger of creating a permanent dependency culture.
According to De Klerk the solution to the problem of inequality lay in vastly improving education and in creating jobs. These were also the factors that had been identified by the National Planning Commission. However, the solution also lay in addressing the underlying social factors identified by the World Bank.
Published in: FW de Klerk Foundation