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South Africa is a particularly valuable case study for understanding inequality and racial discrimination. The case of South Africa illustrates how labour-market, welfare, education, and economic policies combined to shape the patterns and levels of income inequality. In this chapter, the ways in which state policies affect income inequality are described. It introduces the “distributional regime” concept, which describes how the apartheid and post-apartheid states intervened in state policies that affect the level and distribution of income in South Africa.

This chapter analyses the post-apartheid distributional regime in South Africa. It argues that the post-apartheid distributional regime inherited aspects of its predecessor in the form of policies that let deep inequalities persist. First, it examines the shifts in policies in the decade following democratisation in 1994 by looking at the ANC-led governments' emphasis on economic deracialisation. It then discusses budgetary redistribution at the end of the apartheid period. The chapter concludes by analysing the politics of redistribution and explaining why there was no more political pressure for a fundamental transformation of the distributional regime.

This chapter considers what a more egalitarian distributional regime would entail in the South African context. First, it examines how Ireland and the Netherlands expand employment by means of a social accord process. It then evaluates the use of the social accord process to address unemployment in South Africa, arguing that it has to be inclusive of labour-market outsiders. An inclusive social accord in South Africa would need to support high-productivity activities, but not at the cost of slower employment growth overall. The chapter also discusses how to enhance the value of redistribution via the budget in South Africa.

The apartheid distributional regime emerged under conditions of full employment to white South Africans while ensuring economic growth. During this period, white people enjoyed advantaged positions in society and did not require direct state intervention to protect their earnings. This chapter examines the apartheid distributional regime, focusing on the way that distribution in South Africa was shaped by education, welfare, labour-market, and growth path policies.

This chapter explores the nature of South African society at the onset of the apartheid era and discusses the ways social and economic changes were affecting inequalities. It focuses on the relation between class structure and income distribution during this period. With regard to income distribution, society is divided into three classes: rich white households occupying the higher position, coloured and Indian people in the middle and African people at the bottom. The chapter concludes with an analysis of the apartheid distributional regime that the National Party government inherited in 1948.