The average salary performed better in the latest BankservAfrica Take-home Pay Index (BTPI) for July 2023, providing welcomed relief for South African income earners.

“The average nominal take-home pay in July was R15 503, notably higher than the R14 169 in June and R14 509 in July 2022,” says Shergeran Naidoo, BankservAfrica’s head of stakeholder engagements.

These improvements have transpired despite the challenges in the South African economy, such as the ongoing load-shedding, elevated interest rates, a lacklustre job market and low confidence levels. It also appears that some industries have become more resilient to the effects of load-shedding, and have become the underlying positive in recent months.

The average real take-home pay lifted out of its prolonged slump, growing by 1,2% year-on-year to show the first positive growth rate since September 2021. In real terms, the average BTPI increased to R14 344 in July 2023, which was 6,1% higher than the R13 514 measured in June.

According to Elize Kruger, Independent Economist, this is the first glimmer of hope for salaries that has been driven by the notable moderation in consumer inflation. However, she warns this may not be a sustainable trend.

“The renewed pressure on fuel prices has surfaced again, and the depreciation of the rand exchange rate will add to the cost of imported products, pushing inflation higher,” says Kruger.

Consumers have benefitted from consumer inflation moderating from 7,1% y/y in March to 5,4% y/y in June, helping to reduce the erosion of households’ purchasing power.

“This, however, may be short-lived – despite expectations for headline inflation to be at around 5% y/y in July, the sizeable fuel increases on the cards for September could push headline inflation again towards 6%. With these developments, the South African Reserve Bank may decide to hike interest rates at the next MPC meeting in September.

“With household finances already under severe pressure, these changes would be very negative for consumers and their spending power,” she says.

More than 63 000 salaries were paid in July 2023 – however these were not enough to offset the previous month’s losses. With little indication that the second half of 2023 will be significantly different to the first half, the job market is likely to remain lacklustre for the remainder of the year.

The BankservAfrica Private Pensions Index (BPPI) ticked up further in both nominal and real terms during July, continuing its solid performance.

“The nominal average private pension increased to R10 943 in July compared to the previous month’s R10 776, 7,5% higher than one year earlier and the highest monthly payment so far in 2023. In real terms, the average real private pension in July 2023 came to R9 971, 2,3% higher compared to a year earlier,” says Naidoo. These developments suggest private pensions have held up well despite the rising inflation.