What is the inequality trap?

In some countries, the gaps between rich and poor are so wide that too few people are able to build the knowledge and skills needed to fully participate in the society and the economy. Because skills are scarce, those who have them reap disproportionately high financial rewards and social status, while those who don’t are excluded from these benefits.

Those excluded have worse nutrition and poorer health and education, limiting their potential to nurture their children and contribute to the economy as they grow up. The gaps are so big that even “social wages” in some form or another are not enough to break the cycles of exclusion. This lost potential means that these countries can’t keep up with their people’s needs or benefit fully from global innovation. South Africa is one of these countries.

A quarter of our children are nutritionally stunted, seriously damaging their About one in ten children (1.2 million) fail their grade each year and 300 000 learners drop out of school annually, meaning that fewer than half our children actually complete Grade 12. school leavers will become a skilled worker, able to participate in the knowledge economy, resulting in a steadily widening wage gap between the lowest and highest 20% of households. In the lowest 20% of households, the trap extends its reach from one generation to the next.