In South Africa with its high levels of racial inequality, inequality in income distribution is especially large and persistent. For an upper-middle income country (in terms of GDP per capita and economic structure), South African social indicators (e.g. life expectancy, infant mortality or quality of education) are closer to those of lower-middle income or even low income countries. This reflects the unequal distribution of resources and opportunities. A small group of highincome earners sharply increases average incomes, but has little impact on average social indicators, which are low because of this very same inequality. Even in 1995, before the full advent of AIDS, South African life expectancy at birth was only 63 – ten years less than that of Panama, a country of comparable income, and four years less than that of the Philippines, a country with one-third of South Africa‟s per capita income (World Bank 1997).