Real disposable salaries in April showed the strongest increase in 19 months, according to BankservAfrica’s Disposable Salary Index (BDSI), which showed the median take-home salary rose by 2,2% from a year ago.
Salaries also rose for the second consecutive month in April by 1,1%. However, this was slightly below March’s increase of 1,3%.
The average real banked salary of R13 755 has increased by R148 since April 2016. This is due to the higher inflation rate of the past year on which current salary increases are based. The nominal average salary rose by 7,3% to R13 958 in April on a year-on-year basis. This represented a R945 increase in nominal terms.
“Although disposable salary increases usually drive retail sales, the growth in real personal taxes paints a bleak picture for durable sales which could be stymied by low consumer confidence,” says Mike Schüssler, chief economist at Economists dotcoza.
Referring to the recent discussions on minimum wages for May 2018 – and the possible impact on disposable salaries – Schüssler explains that only 14% of the disposable salaries measured in the BDSI are below R4 000 per month, suggesting that the implementation of the minimum wages will be felt amongst smaller firms.
It is unlikely that the current discussions on the minimum wage implementation will have an impact. According to BankservAfrica data, less than 10% of employees currently earn a gross income of less than R3 500.
Findings from the Financial Services Board show that South Africans have been withdrawing benefits from pension funds at a faster pace than contributions being made. In light of this, real pensions paid into bank accounts have increased by 2.9% year-on-year, according to the BankservAfrica Private Pension Index (BPPI).
The average real pension reached R6 620 while the typical pension reached R4 485 in real terms in April 2017, reflecting a 1,3% increase from March 2017.
“In the last 24 months, real pensions only decreased twice. Pension funds have performed reasonably well but perhaps not as well as private pension increases at a consistent rate above inflation,” ends Schüssler.