Pretoria – Government has released the findings of the fourth Wave of the National Income Dynamic Study (NIDS), which profiles what is happening with South Africans across the income spectrum.
The NIDS is a unique dataset that provides information about the same set of households across time from wave 1 in 2008 to wave 4 in 2014/15. The study is undertaken at two to three year intervals, with the first or the base wave undertaken in 2008.
Releasing findings from the NIDS wave four in Pretoria on Thursday, Minister in the Presidency for Planning, Monitoring and Evaluation, Jeff Radebe, said collecting accurate data about South African households is crucial to government’s planning and policy making processes.
“We have eight years of data about our respondents, including the changes or the dynamics in their life circumstances. We collected data on children’s education status, as well as data on their parents’ level of education.
“As government, we are able to use the NIDS data to improve the evidence-base for policy analysis and policy making so that we design policies that have an impact for the better on peoples’ lives.
“In this way, the NIDS data will be able to tell us who is getting ahead and who is falling behind over time and, most importantly, the reasons for this,” said Minister Radebe.
The NIDS is a national research resource undertaken in partnership with the Southern African Labour and Development Research Unit (SALDRU) at the University of Cape Town (UCT) as the implementing agency.
Main findings
Poverty
The main findings of the NIDS waves 1 to 4 is that those who were poor in wave 1, almost three quarters remained poor in wave 4.
“We can conclude that these people are effectively trapped in poverty and will require policy interventions directed at addressing the structural issues in the economy,” said Minister Radebe.
However, there are a number of households whose fortunes change and they either move into or out of poverty.
“These households will require different policy interventions that focus on these transitory periods to support them when they fall into poverty. When we examine these transitions more closely using the data, the findings show that changes to household composition is the largest trigger of poverty entry and exit, and that increasingly the income from government grants acts as the main trigger for an exit from poverty for about one quarter of the NIDS sample,” said the Minister.
The analysis shows that access to the labour market within the household is the single most important determinant of poverty entry and exit. Family size also has an impact on income and expenditure.
Inequality
The nature of the dataset also provides information on the education levels and earnings of both parents as well as their adult children. This allows NIDS to record mobility across generations to determine whether children are better off compared to their parents.
“What we have found is that education and earnings mobility follow two different paths. While there has been an increase in the years of schooling, this unfortunately has not translated into getting better jobs.
“The correlation between the earnings of parents and their adult children in South Africa is high in general, but is particularly strong for low-wage earners and very high earners.
“This means that the advantage of having a more educated younger generation has not yet led to a reduction in earnings inequality. This lack of intergenerational mobility in earnings is an important element in our understanding of the persistence of inequality in South Africa,” said Minister Radebe.
Middle class
With regard to vulnerability and the middle class, the NIDS finds that the middle class in South Africa is relatively small.
The study defined middle class by using a monthly per capita expenditure range of R2 920 to R10 678, based on January 2015 prices. Using this threshold, the middle class in South Africa is only about 15% of the total population.
There has, however, been considerable demographic transformation within that band of the middle class, with Africans now outnumbering whites by about 2 to 1.
“However, this must be understood in the context that Africans are still underrepresented in the middle class in general, taking into account the overall population dynamics,” said Minister Radebe.
Youth employment
The NIDS found that individuals who were most consistently employed across the four waves were also those who had the highest level of education. Two-thirds of those who found employment between wave 3 and wave 4 remained employed. The use of networks was the dominant method of securing this employment.
Almost a third (32%) found their main regular job in the wholesale and retail sector, and 24% found a job in the community, social and personal services sector.
NIDS wave 3 revealed that when educational expenditure increased, the no-fee school policy alleviated the circumstances of poor households by decreasing educational spending for these households.
It also found that the recipients of the child support grant (CSG) aged 15 - 19 years old are 6% more likely to be enrolled in school than non-recipients.
NIDS wave 3 also showed that migration remains a feature of the post-apartheid landscape.
“South Africans are making choices about their lives, choices about moving or staying. One in seven people in the sample population moved. This was mainly to look for employment and to improve their lives and the lives of their children,” said Minister Radebe.
NIDS dataset is freely available and can be found on http://www.nids.uct.ac.za/. – SAnews.gov.za
