South Africa’s take-home pay declined slightly in August on a year-on-year basis.
“The BankservAfrica Take-home Pay Index (BTPI) shows salaries declined by 0,2% year-on-year and the average South African salary was R14 385 in August,” says Shergeran Naidoo, head of stakeholder engagements at BankservAfrica.
“The decline in the BTPI is due to the late and back dated increases of public servants’ wages last year. As the civil service make up around 30% of the BTPI, late salary adjustments and the subsequent back dated increases influence the data somewhat,” explains Mike Schüssler, chief economist at economistscoza.
Therefore, had civil servant salaries been paid on time last year, the BTPI increases would have been slightly lower in April to June while the July and August changes would have been somewhat higher.
“The slight decline is therefore overstated, we expect take-home pay to increase ever so slightly in the next few months,” says Schüssler.
The overall salary movement reflects massive increases, followed by substantial declines caused by delayed salary increases by government. Extended salary negotiations by sectors, such as mining or electricity, have also contributed to these movements.
However, total take-home pay paid to employees still play a significant role in the economy, as evident in the relationship between new passenger car sales and BankservAfrica’s aggregate data for total salaries paid.
“When salary hikes are low, cars sales are also low although with about a one-month lead. It already seems likely that car new car sales will remain subdued as take-home wages are unlikely to have above average increases,” says Schüssler.
The average value of private pensions increased for a record breaking 30 consecutive months as measured by the BankservAfrica Private Pension Index (BPPI). According to Naidoo, the real value of private pensions was R7 282 in August and increased by 5.6%.
“The long period of increases is an incredible feat in the context of a lacklustre equity market performance. However, with interest rates still relatively positive, one is hopeful that pensioners are not using up their savings too quickly,” says Schüssler.
Data from the Financial Sector Conduct Authority (FSCA) shows that the withdrawal benefits of pension funds is now more extensive than the contributions made, and continues to grow substantially.