Affirmative Action's strange result - Frans Cronje

The practice encouraged dependency among blacks, entrepreneurship among whites

White South Africans are quick to complain that affirmative action and black economic empowerment policies have stymied their career opportunities and chances of economic advancement in South Africa. Curiously, however, a review of income and employment indicators for the country does not bare this out. Rather there is now some evidence that the white community may turn out to be an inadvertent beneficiary of the Government's various empowerment and affirmative action policies.

In 2009 levels of unemployment among white South Africans stood at around five percent. This was considerably lower than the national average of just over 23% and even further below the figure of 27.9% for Africans. The unemployment rate for white South Africans was in fact half that for the United States.

Employment equity reports indicate that white South Africans also continue to occupy about 70% of top and senior management jobs in South Africa. They also occupy more than half of all professionally qualified positions. Africans on the other hand occupy under 20% of top and senior management positions and only slightly over 20% of all professionally qualified positions.

Since 1996 annual per capita income for whites increased by 217%. This was only slightly below the increase of 235% for African South Africans. White South Africans have therefore matched the level of income increase for African South Africans even though African incomes have grown off a much lower base. This has happened despite the fact that the Government sought to provide preferential economic opportunities to African South Africans.

In 2009 real per capita disposable income for white South Africans was measured at just under R60 000 per annum. This was six times higher than the figure of just under R10 000 per annum for African South Africans. A further income indicator shows that while white South Africans make up an estimated 13% of adults in South Africa they account for close on 70% of people earning more than R500 000 per year. Almost 75% of adults in South Africa are African but these make up only 20% of people earning over R500 000 per annum. 

On the other side of the income scale the level of poverty in the white community was measured at 3.6% in 2008. While this figure was almost double that of 1994 it must be compared to the poverty figure of 49% for African South Africans - a figure largely unchanged since 1994. The measure used here to calculate poverty was an income of below approximately R900 a month for an individual or R3 500 for a household of 8 people. 

The white community remains the most equal of South Africa's four major race groups. It is also the only racial community that is now more equal on the Gini-coefficient than it was in 1994. The Gini-coefficient measures inequality on a score from 0 to 1 with a 1 indicating complete inequality and 0 indicating complete equality where all people would earn the same amount of income. White South Africans score 0.45 on this scale down from 0.49 in 1996. This is almost on a par with the figure of 0.4 for the United States. The figure for the African community stands at around 0.6, up from 0.54 in 1996. Scores of over 0.55 are deemed to indicate extremely high levels of inequality.    

While incomes and living standards for African South Africans have improved since 1994 the data is unambiguous that white South Africans continue to maintain a vastly superior standard of living when compared to the standard enjoyed by African South Africans.

This poses two questions. The first is why so many white South Africans are so quick to feel that their opportunities for career advancement and economic prosperity are limited. Doubtless affirmative action and black economic empowerment policy is discriminatory and has closed opportunities for whites to access soft jobs in the public service and ‘easy' tenders for government work. Yet despite these ‘challenges' the white community's standard of living has been maintained and in fact improved.

This suggests that the discriminatory employment and empowerment policies of the ANC may have forged a greater sense of entrepreneurship and independence among white South Africans. This despite the fact that large sections of the white community had always shown a flair for entrepreneurial activity. Now without the opportunity of soft jobs in the public service (or private sector) or of doing business with government many whites have been forced to become more independent and take what might be described as even greater ‘personal responsibility' for improving their own standards of living. Cut off and effectively discriminated against by the State it can only be entrepreneurship, the taking of risks, and the acquisition of ever improving levels of education and expertise that explain the maintenance and improvement in living standards within the white community after 1994.

Further examples of this growing independence from the State can be taken as far as to include reliance on private healthcare and security through which many whites now have access to far higher standards of service than those on offer through the public sector. This independence may even be considered to include the very large number of young white South Africans who have taken the risk to pursue careers in other parts of the world even as they maintain close social, family, and economic ties with South Africa.

Arguably, therefore, the income and employment data above is early evidence that white South Africa might emerge as the unlikely beneficiary of affirmative action and black economic empowerment. What is certain is that the independent and entrepreneurial mindset that may have been further invigorated by black economic empowerment and affirmative action will come to be a formidable economic asset.   

The second question is the converse of the first and is why so many African South Africans still appear to cling to the hope that Government driven affirmative action and empowerment policies offer them a real chance at escaping poverty. Over a decade of evidence now suggests that other than the establishment of a small African middle class, most Africans have been left behind. The proponents of affirmative action and empowerment policy will argue that these policies have not failed but rather that they were not enforced or implemented properly by Government. Some on the left of the economic spectrum now even advocate granting the Government authority to nationalize private business in order to hand this ‘wealth' over to the poor.

This mindset of ‘government will provide for me' if only it was granted even greater powers and responsibility is likely to see affirmative action and empowerment policies continued. It may even lead to more extreme economic policies including nationalization. However, when one considers education data which shows that white children significantly outperform African children in school subjects such as science and mathematics the suggestion that the failure of affirmative action and empowerment policy lies in weak enforcement seems implausible. So does the argument that white wealth lies primarily in mines and banks. If anything the record of white living standards after 1994 suggests that that wealth now rests primarily in the mindset and the skills-set of that community which is an asset that the Government can never expropriate. The failure of public education alone has sabotaged the chance of African South Africans gaining any broad benefit from affirmative action or black economic empowerment or that they will wrest much benefit from the confiscation of a major bank or mining company.

The difficulty of improving African living conditions will of course be even further compounded by the mindset that has been cultivated to believe that ‘government will provide'. For there can be no chance of this mindset competing on an equal economic footing with the growing independence and self reliance on display in the white community. Herein lies what may well become the cliché of South Africa's future and irony of its recent past, that affirmative action and black economic empowerment policy disempowered its greatest proponents while empowering its most fervent critics.   

South Africa's ‘racial communities' often appear to be stuck in perceptions of reality that bare little resemblance to facts about the country. As the French philosopher Pierre Valery commented, "a fact poorly observed is more treacherous than faulty reasoning". As a result for many whites the argument that affirmative action will stall their economic progress is repeated verbatim even as their relatively high standards of living are maintained. For African South Africans the idea that the Government will lead their emancipation from poverty survives in support for the Government despite the growing evidence that such emancipation is now unlikely. In politics perceptions are often more important than reality and therefore the unsubstantiated perceptions of both white and African South Africans come to dominate much discussion about racism and poverty in the country. What is unfortunately likely is that maintaining this status-quo is going to cause future problems both for race relations and for the general stability of the country.    

Frans Cronje is deputy CEO of the South African Institute of Race Relations. This articles first appeared in SAIRR Today, the Institute's weekly online newsletter.

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