Employment has increased among higher-income groups in South Africa, while many of the country's lowest earners have lost their jobs, according to a transformation audit released on Wednesday.

"The complexion and character of the labour market had not changed much since 1994, despite many legislative gains for workers' rights," it said.

"Educated and affluent citizens, on the other hand, have been the major beneficiaries of a skills-biased economy."

As a result social inequality has grown, with most South Africans perceiving the gap between rich and poor as being the country's most divisive fault-line.

Just over a third of South Africans polled said that income inequality has become the most divisive aspect of South African society, while a fifth attributed it to the unresolved issue of race.

The audit, conducted annually by the Institute for Justice and Reconciliation (IJR), found that inequality had worsened to the extent that South Africa was now arguably the most unequal developing state.

The South African Reconciliation Barometer Survey, which the audit

reports on, found that 39 percent of respondents felt they were likely to be unemployed at some point this year.

Forty-eight percent of respondents felt it was better to have a low-paying job than no job at all.

Reasearchers warn that mass retrenchments could become the catalyst for violent action, which unions would not be able to contain and urges a partnership between government and other parties to address the problem of unemployment.

Most of the survey respondents felt that “national government does not care about people like me”.

However, black South Africans were the most likely to report an improvement in their living conditions in recent years, and the least likely to report deterioration.

On education, the survey found that the performance of some formerly disadvantaged schools had declined, while the gap between the results of those schools in privileged areas increased.

The audit, which aims to assess the country's progress towards the creation of a more dignified life, was made public at a press conference in Cape Town on Wednesday.

IJR head Jan Hofmeyr said the South African economy required major structural reform for the country to achieve its most basic developmental targets.

"The bold option would be to make strategic but difficult choices now to avoid delaying accelerating development any longer.”