The number of monthly salaries paid in June 2020 showed an annual decline of -20,7%, affecting one-fifth of employees’ salaries.
This is according to the latest figures from the monthly BankservAfrica Take-home Pay Index (BTPI).
“We have seen this massive slide in salaries processed by BankservAfrica and through the National Payment System in recent months,” says Shergeran Naidoo, head of stakeholder engagements at BankservAfrica. “However, the figure in June is most reflective of the heavy toll that the current Covid-19 crisis has placed on employers and employees who are faced with major financial distress under the current circumstances.”
The majority of payments recorded in the BTPI feature large corporates and a fair number of medium-sized firms that are served by payroll service providers and firm-owned payroll administrators. As such, this recent decrease may not reflect the full impact of salary declines on small firms.
However, with the BTPI over-representing civil servant and state-owned entity payrolls, it becomes evident that the reduced salary numbers are most likely to be in the private sector.
This is supported by data showing an estimated 30% of the BTPI monthly equivalent payments are paid by the broader government sector compared to 21% shown in Stats SA’s Quarterly Employment Survey.
“We surmise that one-fifth of employees in the private sector did not receive a salary in June 2020. The -20,7% decline could be the result of job losses or it could due to a temporary pause in payments,” says Mike Schüssler, chief economist at economists.co.za.
“We caution that while the BTPI numbers cannot be used as a measure of the unemployment rate, we do believe that our salary data provides a quick and effective indication of the employment statistics on the ground through the number of salaries paid.”
Naidoo adds: “In June, the actual average take-home pay declined by -0,5% in real terms. This could be the result of instances where salaries may have increased or that the personal income tax provided relief above the current inflation rate.”
“With tax relief of over 5%, a 1,7% nominal increase in actual salaries is extremely low,” Schüssler adds. “Moreover, usually when inflation declines, as it currently has, real take-home pay increases even with low salary adjustments.
BankservAfrica and economists.co.za have created an estimate of the number of payments for each salary category and their annual movements. This estimate is based on the amount of salaries paid and BankservAfrica’s numbers of how often these payments took place.
Estimates of the number of payments that declined by salary category
| Type of payment description | % change from June 2020 vs
June 2019 |
| Number of overall take-home payments (monthly equivalent) | -20.7% |
| Daily / Casual payments | -35.2% |
| Weekly payments | -17.1% |
| Monthly payments | -9.1% |
Source: BankservAfrica and economists.co.za
“As many expected, daily/casual workers (-35.2%) followed by weekly workers (-17.1%) have been hurt the most. We are seeing a decline in monthly salaries of -9,1%,” says Schüssler.
The seasonally adjusted nominal take-home salary in June was R15 869, which was 1,7% higher than in June 2019. The real monthly take-home pay was R14 197. “The real take-home pay declined by -0,5% on an estimated inflation rate of 2.4% in June 2020,” says Naidoo.
Meanwhile, the BankservAfrica Private Pension Index (BPPI) declined for the second consecutive month with a fall of -0.3% to reach R7 355 in real terms.
“Real pensions could be declining as a result of the interest rate reductions and the pressure that other assets have come under,” says Schüssler.
The total value of take-home salaries paid in June declined by -25,6% while overall pensions pay dropped by -4,6% both in nominal terms. The combined decline for total take-home pay and pensions was by far the biggest on record at -23,5%.
“The numbers are extremely concerning and will have a profound impact on the South African economy,” says Schüssler. “The knock-on impact is also likely to be larger than many have estimated. Lower confidence levels and growing concerns over job security will have a severe impact on retail sales and consumer spending.”