South Africans are a pessimistic crowd of people believing that the present is not very good, and that the future will be worse. The media in South Africa certainly spends a lot of time convincing us of this.However, we can measure this more objectively: LSM is a measure of living standards that considers what you have in your home. (Click on the top menu for more information).But before we even start to try to give an insight in what the South African market looks like, it is important to look at how it has changed over the past decades.
To do this, we specifically look at the market in 1997 (three years after the birth of the New South Africa), 2003 and 2013.
To keep things comparable we will use the LSM calculation that was determined in 1993 to classify people into LSM segments. This way we are keeping the criteria for comparison constant.
Underlying this chart is the following:
The total population of South Africa, over the age of 16, grew between these periods:
Estimated Population (16+)
1997 26 million
2003 30 million
2013 37 million
A large number of people moved from LSM 1-3 (the have-nots) into the middle LSM groups.
The only higher LSM group that has not increased is really the LSM 8 group.
It is an obvious anomaly that the LSM 8 group size has not increased since 1997 which is explained when one considers the racial composition of the country. In South Africa everything has to do with race ;<).
Race And LSM And ‘The Chicken Run’
The above chart shows that the white population remained static, even decreased, over the last decade. This would be unnatural if one compares this with what happened to the size of the other population groups.
To put this into perspective the chart below shows the percentage composition of the racial groups in the country.
This decrease in the white population is especially notable when it comes to the composition of the two higher LSM groups (7 and 8).
There are now ½ million fewer whites in this LSM group than there was in 2003. All the other racial groups increased their numbers in the highest LSM segment.The same decrease in the numbers of whites does not show up in LSM 7.
It is obvious from these charts that the white population did not migrate down from LSM 8 to LSM 7. I.e they are not poorer.What has happened is that nearly ½ million white people have left the population – that is,emigrated.The implications of the ‘chicken run’ are devastating to the country and not often enough pointed out:
It is the wealthier groups that emigrate.
These people are wealthy because they have expertise and they take this with them.
The countries that accept them accept them to get their money and their expertise.
These people take their money with them leaving the country poorer.
They take their expertise with them, leaving the country poorer.
This money then shows up in the economy via poorer exchange rates for the Rand, which in turn increases prices of nearly everything. (Note that there are other economic factors that also contribute to the exchange rate problem we have.)
Neil points out here that one should not forget that the exchange rate is also affected by crime, corruption, bureaucratic incompetence, etc. He is correct. However these are the things that cause (especially) whites, and more recently Blacks to emigrate taking their wealth with them.Before we become to bitter about these people, it is worthwhile to point out that in the rest of this book we will see how it is only human to want to improve one’s living standard in one’s own perception, which is what these emigrants are doing. For example:
People migrate from rural areas to urban areas in search of better opportunities.
People migrate from poorer neighbouring countries to South Africa in search of better opportunities.
People try to get better education and better jobs.
People want to go where there is the convenience of electricity and running water – better infrastructure generally
People will agitate for better service delivery and better jobs and salaries.
Unfortunately all these migrations also mean a flow of expertise and ability, leading to a concomitant cost for the areas that are losing these people.
We Are All Better Off
The important lesson coming out of this chapter is that we are all better off.
If we take the measures that were used in 1993 to divide the population in roughly 8 equal segments based on what they have then everyone has an improved standard of living.
The only exception to this rule would be the whites that were in LSM 8 and have left the country.
Source: SA Marketing Magazine