Education the best tool to narrow inequality and unemployment, says World Bank

Race and education drive South Africa’s disparities, the bank says.

According to the World Bank, South Africa is the world’s most unequal country, where skilled labour is in short supply, and education levels make the biggest difference in employment outcomes. The bank asserts that race and education play the biggest roles in driving inequality in the country.

In a report titled Inequality in Southern Africa, education’s contribution to income inequality is 30 percent more than two decades after the end of apartheid, the bank said.

The report’s authors used the Gini coefficient – a measure of income inequality – to rank the countries. While the report showed the Gini coefficient for consumption per capita in the region improved slightly from the 2000s up to 2016, most of the information in the report predates the Covid-19 pandemic that forced an estimated 3.2 million people in the region into poverty and probably worsened inequality.

South Africa’s neighbours, Botswana, Eswatini, Lesotho and Namibia, which comprise the Southern African Customs Union (Sacu) are all among the world’s most unequal, making the region the worst globally, it said.

World Bank director for Sacu, Marie Francoise Marie-Nelly, says, “Levelling the playing field at birth through more inclusive delivery of quality education, health, and basic services is critical to reducing inequality in the region.”

Race, gender and employment
The report points to race as a key driver of South Africa’s high inequality through its impact on both education and labour-market outcomes. 

Gender also plays an important role in the region, with women earning on average 30 percent less than men with the same level of education. The pay gap between men and women reaches 38 percent in Namibia and South Africa.

The report suggests “equalising” opportunities through  addressing the highly skewed distribution of productive assets through generating jobs by cutting business regulations and boosting entrepreneurship.

The bank recommends enhancing the impact of fiscal policy on inequality by improving the targeting and efficiency of public spending on education and health as well as strengthening climate change resilience, especially in mitigating water scarcity as other remedies.