The Gini Coefficient, or Index, is universally recognised as a measure of the inequity between the rich and the poor and is used to illustrate the size of the gap. International comparisons are interesting. In the world as a whole, the figure is estimated to be somewhere between 56 and 66, where zero would represent complete equality and 100 would be the figure if all wealth were in the hands of one individual. In various tables, Namibia is reckoned to the country with the most inequity with a Gini index of 71. Translated into more recognisable language, this implies that the richest ten percent of the population earns 128 times more than the poorest ten percent.

In 2000, the UN’s figure for South Africa was 57,8. However, on another website I have read that our index was 69 in 1996 and escalated to 77 in 2001. If that is so, Nambia is possibly not the most inequitable society after all. In order to make some meaningful comparisons, I’ll stick to the UN figures of 2000. At that time, Australia stood at 35,2, Canada at 32,6, China at 46,9, Germany at 28,3, the UK at 36 and the US at 40,8. Denmark’s index was the lowest at 24,7.

My sense is that our economic progress since 2000 has not done anything to lower the index. Indeed, I would be very surprised if it hasn’t risen significantly. It seems to me that the parade of wealth and personal prosperity in our country reflects, if not an increase in the actual index, at least a common perception that while the rich are getting richer, the poor are little better off.

Recently, I have been involved in the process of appointing a new CEO for a business organisation. It is an NGO, just like our chamber, in fact, which also experiences very challenging financial constraints. I would rate the job at about the level of Director or Chief Director in the public service, but in the private sector, it seems, as well as the quasi private sector (Eskom, for example), it is the individual which carries the value and not the job itself. Of the better applicants, several were rejected because their salary demands were quite beyond the organisation’s capacity to pay. As it has turned out, the person chosen will not come at less than 30% more than was earned by his predecessor.

People will say that this remarkable jump within a year or less reflects market conditions. So it does, but it is a market gone haywire. I think it is attributable to the fact that employment equity has introduced an artificial aspect to the labour market. Because of the appalling educational discrimination of the past, black people with top skills, qualifications and experience are in short supply, and candidates for top positions are more or less in a position to name their prices. And they do. They are in the strong position of knowing that they will be in demand somewhere else if their expectations cannot be met. There is a very good chance, too, that they will be lost to another organisation in a comparatively short time when a larger carrot is dangled and salary demands are pushed even higher.

In the meantime, ordinary workers are having to fight for an inflationary increase in the face of such huge increases in the prices of basic consumer items. Little wonder that COSATU’s views have become increasingly socialist. Free market has done little to advance its members or the millions who are poverty-stricken.

Andrew Layman: PCB CEO

This article appeared in the Public Eye on the 1 May 2008