According to the latest BankservAfrica Take-home Pay Index, published on Wednesday (Sept. 28), take-home pay recovered marginally in August as salary data continues to point to more job creation. The impact of rising inflation should ease by the end of the year, the clearinghouse says.
The index is calculated on a monthly basis by dividing the total value of salaries deposited into employees’ bank accounts – excluding salaries over R100,000 per month – by the total number of salary payments, suggesting that the impact of rising inflation should begin to moderate by the end of the year.
August was another rough month for the South African economy, with ongoing power problems, higher inflation and rising interest rates all commonplace, said Shergeran Naidoo, head of stakeholder engagement at BankservAfrica.
He said that despite these ongoing challenges, the nominal BankservAfrica Take-home Pay Index (BTPI) indicates that the average nominal salary (after deductions) has recovered marginally to R14,688 in August, compared to R14,360 in July 2022.
While still below the February 2022 high of R15,614 and still 1.0% lower year-on-year, it was up 2.3% from the previous month.
For the year so far, however, salaries have lagged the average inflation rate, BankservAfrica said.
“It appears that the average salary has stabilized somewhat in August,” said independent economist Elize Kruger. “However, from a year-to-date perspective, salaries have lagged compared to average headline inflation.”
“In line with our expectations, consumer inflation declined slightly from the 13-year high of 7.8% reached in July to 7.6% in August. The moderation was caused by lower fuel prices, but markedly higher food prices offset the effect somewhat.
“The South African Reserve Bank also raised its benchmark interest rate by a further 75 basis points in September and indicated further hikes were in the pipeline, clearly indicating that the average worker’s finances are likely to remain under pressure. This is reflected in the 8.0% year-on-year decline in the real average salary recorded in the BTPI in August.
“But given that we had predicted that the July CPI print of 7.8% would be the highest turning point of the current inflation cycle, the pressure should ease somewhat as inflation eases towards the end of the year. We predict inflation could be around 6.6% by the end of the year,” Kruger said.
While the BTPI suggests that average consumer incomes are under severe pressure, the group said it has indicated in recent reports that its data indicates more people are receiving salaries compared to a year ago.
Indeed, BankservAfrica’s indications were corroborated by the factual data, as evidenced by StatsSA’s latest Labor Force Survey, which reports that a remarkable 648,000 jobs were created in the second quarter (up from 370,000 in the first quarter), despite the challenging economic environment.
BankservAfrica’s data in August again indicated that more jobs were being created, but the pace of job creation has clearly slowed down, probably due to all the economic headwinds.
Average private pensions have held up well despite rising inflation
The BankservAfrica Private Pensions Index (BPPI), meanwhile, showed that the average nominal private pension reached R10,000 per month in June for the first time and remained above this level for the third consecutive month, representing a growth of 8.5% on annual basis – annual basis.
In real terms, the average real private pension was slightly lower than in July, at R9 655 in August, only 0.8% higher than a year earlier. While some monthly real declines were recorded in the first half of the year, average real pensions have held up reasonably well despite rising inflation, preserving the purchasing power of retirees.
Total value added carry-over wages and private pension benefits increased by 4.7% in real terms and by 12.7% in nominal terms compared to a year earlier, unseasonally adjusted.
Read: SARS comes after these taxpayers in South Africa – looking at luxury homes, cars and rhino horn