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Black middle class under siege because of ‘black tax’, Covid-19 and economic pressures

Black middle class under siege because of ‘black tax’, Covid-19 and economic pressures

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Cape Town – The black middle class is under siege because the economic gains made after the fall of apartheid are at risk, according to a new report which points out that they face a great deal of pressure not to slip back into a place of uncertainty.

The Black Middle Class Research Report released Tuesday by UCT and the Liberty Institute found widespread anxiety around middle-class status as a result of the Coronavirus pandemic.

Liberty Institute project head and report co-author James Lappeman said the pandemic created a bit of fear about regression among those surveyed. The report quoted an unnamed respondent to the survey who said: “Coming from a disadvantaged background, the Covid-19 pandemic caused me so much anxiety as I was afraid to lose my job, and afraid I might go back to the financial state I initially grew up in.”

Lappeman said while 70% of the people surveyed for the report said they were not worse off financially as a result of the pandemic, finances were a major source of stress.

Lappeman listed areas of concern and said they included “their health, crime, their children’s future and not being able to support dependants financially.”

Besides the financial impact of Covid-19, for many in the survey there has also been a significant non-material impact with 42% saying their mental wellness has deteriorated in the last year. The report said 48% of those surveyed said they usually ran out of money before the end of the month and that 10% said they have over R100 000 in savings to cover unforeseen emergencies.

This is in comparison to 37% among the country’s white middle class. While Lappeman said today’s black middle class was different to when it was first studied by the institute 15 years ago, the report found that giving back and paying forward continues to define this generation of middle-class black South Africans.

In this respect the survey found that compared to white respondents, black respondents were 29% more likely to support their parents on a monthly basis, 31% more likely to support their siblings on a monthly basis and 30% more likely to support other family members on a monthly basis

Speaking to the issue of “black tax,” a regressive term that has stuck, and how it all ties into this aspect of the black middle class, marketer Ntombizamasala Hlophe said the black tax model was largely a cash transfer system. She said it involved an increasingly complex network of dependants and an extending list of needs for an arguably diminishing base of income.

She said during the pandemic the model had shifted as a number of black middle-class people working in cities had moved back to live with their families in an effort to save on costs.

Hlophe said that during this period many had been forced to give more in “black tax” as they no longer had costs such as rent and transport making a claim on their incomes and could not keep sections of their money hidden as they might have when living away from home.

The latest report said the black middle class constitutes 3.4 million people, making up 7% of South Africa’s black African population, with a spending power of R400 billion a year. The study was conducted over a year with a survey of over 1 900 middle-class households along with over 300 interviews. Participants from the initial studies back in 2007 and 2005 were brought back to share how their middle-class experience has been shaped in the last decade.

The report defines the black middle-class consumer segment as households with an income of R22000 per month and above. It further distinguishes this segment between the middle and upper black middle class.

It is further differentiated from the lower middle class by the lack of government support required and the fact that despite low economic growth, the number of high-earning taxpayers has grown from 1 million in 2017 to 1.28 million in 2019.

Lappeman said this conclusive definition is one of many held by economists and marketers in South Africa.

mwangi.githahu@inl.co.za

Cape Argus

Original Article

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