A new study by economists Léo Czajka and Amory Gethin offers the most comprehensive picture to date of how income inequality has evolved in South Africa between 1993 and 2019, drawing on a newly constructed microdatabase that combines survey data, tax records, national accounts and budget information.
The findings reveal a complex reality: although racial inequality has decreased significantly since the end of apartheid, overall income inequality has barely shifted and remains deeply entrenched. According to the study, pretax income inequality is still extraordinarily high, with the top 10% of earners capturing 70% of all income and the country’s pretax Gini coefficient sitting at roughly 0.8. These levels make South Africa the most unequal nation for which reliable income data is available.
The research shows that pretax inequality in 2019 was effectively the same as in 1993, the year before South Africa’s first democratic elections. Inequality increased between 1993 and 2005 as racial gaps widened and redistribution largely stagnated. It was only after the mid-2000s that pretax inequality began to decline again, partly due to new social policies and shifts in the labour market.
One of the study’s most notable findings is that racial pretax inequality has narrowed substantially. However, almost half of this decline is attributed to the exceptional rise in incomes among the top 10% of Black South Africans, rather than broad-based gains across the population. The disparities within racial groups are stark: in 2019, the average income of White South Africans was similar to that of Denmark, while the average income for Black South Africans was closer to that of Bangladesh. Within the Black population itself, the top 10% had incomes comparable to Italy, while the bottom 90% earned at levels similar to Zimbabwe’s national average.
The authors note that inequality in South Africa is increasingly driven by class divisions within racial groups, even as race continues to shape access to opportunity.
The study also identifies a significant shift in the role of redistribution since the mid-2000s. South Africa’s tax-and-transfer system, which includes social grants, tax credits and public services, has become markedly more progressive, resulting in a meaningful reduction in posttax inequality. The poorest half of the population now receives 50% more in net transfers than two decades ago, largely due to expanded social grants and strengthened tax collection.
Despite this, redistribution between racial groups has not increased. Instead, the rapid growth in incomes among high-earning Black households has shifted about 20% of the tax burden away from White South Africans and toward affluent Black earners, who have become major contributors to funding South Africa’s welfare state.
Three decades after apartheid, the study suggests that while South Africa has narrowed some of the vast racial gaps of the past, the overall structure of inequality remains as deep as ever. Persistent joblessness, labour-market stratification, and widening divides within the Black population continue to shape economic outcomes. The authors argue that addressing these layered inequalities, racial, spatial, and class-based, will be central to creating more inclusive growth in the decades ahead.
