The average and overall real salary paid in South Africa contracted in January 2021 after being strained by the pandemic and the Level 3 lockdown, according to BankservAfrica’s latest Home Pay Index (BTPI).
“The real average wage was 13,030 R, which represents a decrease of 2.4% compared to December 2020 and a decrease of -0.2% year on year, ”said Shergeran Naidoo, Head of Stakeholder Engagement at BankservAfrica.
“This is a sure sign of the pressure on average wages during this period.”
However, this reflects a return to usual movements, with average wages in the construction industry generally decreasing before making a slight return in real terms.
It could also have to do with the high average salary base from the previous year, Naidoo said.
“As South Africa and the world begin to emerge from the lockdown and pandemic, and vaccinations slowly come to the rescue, we can expect a return of negative months before things improve hopefully, ”said Mike Schüssler, chief economist at economists.co.za.
Inflation has also played a role in the construction industry. In January 2021, the total take-home pay paid to combined employee bank accounts only increased 0.6% before inflation. However, if inflation is taken into account over the past year, it has fallen by 2.5%.
“The economic rebound has been impressive and most formal sector employees paid through the national payment system have managed to keep their jobs or have been rehired,” said Schüssler.
However, one should not be optimistic too early because the total number of net banking salaries remains lower than a year ago and before the pandemic.
“A number of people are still not back to work, which we believe explains the 3.2% drop in the monthly equivalent paid between January 2020 and 2021,” Schüssler said.
According to the BTPI, average wages are starting to normalize, as expected a few months ago. This return to normal wages is expected to continue, with some affected sectors facing shocks in the coming months.
The overall take-out figures suggest that January will be a month of weak consumer spending compared to a year ago.
However, restoring COVID-TERS payments until the end of March for industries affected by the lockdown could provide some near-term relief.
But, with the real average take-home pay declining, it will be interesting to see if there will be tax relief for employed South Africans when the national budget speech is tabled tomorrow.
Indeed, businesses and households are under even more financial pressure due to the expected 16% increase in electricity costs in April.
Read: Higher minimum wage for South Africa was not a ‘boost’: Minister