South Africa’s post-lockdown recovery will likely be troubled by the huge number of skilled South Africans leaving the country, says the CEO of Rand Merchant Bank, James Formby.
In his interview with BusinessDay, he said that a large number of qualified and experienced individuals in their thirties and forties are leaving the country for better positions overseas.
The infrastructure and development sectors will be particularly hard hit, if skilled professionals in these sectors leave the country. And these sectors have been highlighted as key to the country’s recovery by the President.
Formby continues saying that it is difficult to bring skilled people into the country and this has led to a huge drain on South Africa’s skills base.
This brain drain also has direct implications, as other experts have pointed out. The
National Income Dynamics Survey sets out the number of adults living in households according to income band
For the income band described as ‘middle-class’ and above the data shows that between 2017 and June 2020, the adult population contracted from 6,1 million to 2,7 million, which amounts to a reduction of 55.73%.
At the other end of the income band, the number of people defined as ultra-poor, namely, those earning below minimum wage increased by 6,6 million or 54%.
Commenting on the findings of the survey, Jean du Toit, head of tax technical at Tax Consulting SA said there are a plethora of reasons for this decline in the middle class.
“In terms of the 2020 Budget Review, roughly 90% of the income tax payable by individuals is paid by the middle-class and above – as defined in terms of the survey.”
“This puts the result of the survey into perspective; in a three-year period, our personal income tax base appears to have more or less halved, and it is likely that a large chunk of that reduction occurred after February 2020,” continued du Toit.