Gauteng highest earning province in SA

As starting point for predicting personal income for South Africa for 2010, the study firstly estimates changes in the size of the adult population between 2009 and 2010 by geographic location, population and income group, age and educational status. In this regard, the BMR anticipates a growth rate of 2.8 % in the adult population (aged 16 years and older) for South Africa between 2009 and 2010. According to van Aardt, growth in the adult population is anticipated to be the highest in the Mpumalanga (4.1 %) and Limpopo (3.8 %) provinces.

Having established 2009 and 2010 population estimates of greatest likelihood, personal income estimates of greatest likelihood for 2010 were derived by using a variety of available economic, income and labour market databases to update the BMR's personal income database to 2010 through a variety of micro- and macro-econometric modelling techniques.

It appears from the results obtained by means of such modelling that Gauteng has the most adults (population aged 16+) and is also the province with the most adults in all the income groups earning more than R50k pa. The Eastern Cape and Limpopo have the highest percentage of adults earning less than R50k pa, namely about 87 % of adults in these two provinces (see table A).

Table A - Adult Population by Province and Income Group 2010

It is evident from the research that Africans and Whites constitute the bulk of adults in the higher income groups, with Africans dominating in the emerging middle class income groups of R50k-R300k pa, while Whites still make up the majority of the R300k+ pa income groups. It also appears from the results that, during 2009 to 2010, low personal income growth rates (in nominal terms) were experienced by adults in the lower income groups (R300k pa and lower), which can largely be explained by the after-effects of the 2008 to 2009 recession on personal income growth in South Africa.

It also is evident from table B that the higher income groups experienced relatively high personal income growth rates as they recovered more rapidly after the recession due to the relatively high skills levels that they offer to the labour market/economy.

Table B - Adult Population Growth Rates by Population and Income Group 2009-2010

Turning towards the distribution of income in monetary terms, table C shows that about 34.6 % of all personal income in South Africa accrued to Gauteng in 2010. Also, about R1 184 424 million (constituting 65.8 % of total personal income) was earned in Gauteng, KwaZulu-Natal and the Western Cape jointly.

According to Prof. van Aardt the results of this report have far reaching consequences with respect to the population-economic make-up of South Africa, namely:

The bulk of the South African adult population still falls into the R 0-R50k per annum income group despite relatively high levels of economic growth over the past two decades. This could be attributed to low elasticity between economic and employment growth in South Africa.

The income distribution in South Africa is still very skew as evidenced by the fact that during 2010 the estimated 522 337 adults (1.6% of the adult population) who earned incomes of R 500k+ per annum in 2010 earned 24.5% of all personal income in South Africa.

The higher income groups experienced much higher levels of growth than the middle income groups during 2009 to 2010, thus showing that the recession had a particularly severe impact on the growth of the emerging middle class in South Africa.

Research Report No 396 may be purchased from the Bureau of Market Research. Email Madeleine Goetz az.ca.asinu@mzteog for more information.