For the third consecutive month, the nominal take-home pay among South Africans has shown positive growth on a monthly and annual basis, according to the latest BankservAfrica Take-home Pay Index (BTPI) for September which says conditions in the private sector have improved somewhat.

“The nominal take-home pay of R15 673 in September was a marginal growth on the R15 605 recorded in August and 4,1% higher than the R15 056 in September 2022,” says Shergeran Naidoo, BankservAfrica’s head of stakeholder engagements.

The BTPI averaged at R15 610 in Q3, which was 6,8% higher than the R14 623 registered in Q2, signalling 2023 could be a better year for salaries overall compared to 2022.

“While the ability for companies to pay inflation-related salary increases was hampered in the past 18 months, especially by a rising operating cost environment, industries have generally become more resilient to the effects of load shedding. If sustained, the somewhat better conditions in the private sector could provide better employment and remuneration prospects in the coming months,” says independent economist, Elize Kruger.

After two months of growth, the average real take-home pay declined to R14 239, lower than the R14 278 in August – and slowed by 0,8% compared to a year ago. The slight deceleration was caused by the sharp increase in September’s headline inflation to 5,4%, notably higher than the 4,8% in August. The increase was driven by a notable increase in fuel prices in September.

Despite the partial reversal of recent fuel price increases expected in early November, headline inflation is expected to stay in the 5% to 5,7% range for the next nine to 12 month. Consumer inflation is forecast to average around 6% in 2023 compared to the 13-year high of 6,9% in 2022. This should moderate to around 5,3% in 2024.

While the interest rate cycle has likely plateaued, the upside inflation risks posed by the renewed rand depreciation and higher fuel prices, among others, could see interest rates remain elevated for some months with all other challenges persisting.

“With household finances already under severe pressure, this scenario remains negative for the spending ability and confidence levels of consumers,” says Kruger.

The BankservAfrica data adjusted for weekly payments, suggests a moderate pick up in the job market in Q3. According to the BankservAfrica sample, which represents about 25% of the labour market, 75 000 more salaries were paid in Q3. This builds on some progress made in Q2 with StatsSA’s recent Quarterly Employment Survey indicating that 39 000 jobs were created in the non-agricultural formal sector in Q2, while its sister publication, the Labour Force Survey, also confirmed that 154 000 more people were employed in the formal, informal, agricultural, and household sectors.

“While each new job opportunity should be celebrated, the stark reality is that South Africa’s population growth far exceeds its economic or job growths over the past number of years. As such, the unemployment rate remains stubbornly high,” says Kruger. At 32,6% in Q2, the official unemployment rate is one of the highest in the world. Most affected are the youth.

The BankservAfrica Private Pensions Index (BPPI) slipped marginally in nominal and real terms during August and September but remains in positive territory on an annual basis.

“The average nominal private pension fell marginally to R10 758 in September compared to the previous month’s R10 780. It remains a healthy 8,7% higher than one year earlier,” says Naidoo.

In real terms, the average private pension came to R9 727, 3,2% higher compared to a year earlier, signalling that the purchasing power of pensioners in the BankservAfrica database has been preserved amid the high inflation environment.