The average nominal take-home pay, tracked in the BankservAfrica Take-home Pay Index (BTPI), showed a marginal uptick in June, adding to the stabilisation observed over the past three months despite the tough economic conditions.
Shergeran Naidoo, BankservAfrica’s head of Stakeholder Engagements, said on Wednesday that the average nominal take-home pay for June was R14 596, exceeding the R14 579 level shown in June last year, and fairly higher than the R14 483 in May this year.
Elize Kruger, an independent economist, said this stabilisation in salaries noted since April this year was welcomed against the backdrop of economic activity that has been dampened by the ongoing load shedding, rising interest rates, a lacklustre job market and low confidence levels.
She said indications that some industries had become progressively more resilient to the effects of load shedding was an underlying positive development in an otherwise dismal environment.
Furthermore, the South African Reserve Bank recently upwardly revised its real gross domestic product growth forecast for this year, as have other forecasters, in response to the observed resilience, she added.
On a year-on-year basis, the average real take-home pay remained in negative territory in June but less so compared to the previous two months. The real average take-home pay, according to the BTPI, increased to R13 522 in June, 0.8% higher than in May this year but still 5.7% lower than the R14 336 recorded in June last year.
Kruger said salary earners had had to deal with a double whammy during the past year of disappointing average nominal wage increases and high consumer inflation. The erosion of households’ purchasing power has been evident in declining retail sales. Statistics South Africa (StatsSA) recently indicated that real retail sales for the first five months of this year were 1.2% below the corresponding period last year.
According to the payments clearing house, the latest Altron FinTech Household Resilience Index (AFHRI), which provided more clarity on the financial disposition of households and their ability to cope with debt, confirmed the observations from BankservAfrica’s BTPI.
The AFHRI indicated that household financial resilience declined by 2.4% in the first quarter this year, compared to the last quarter of last year and by 1.8% year-on-year with South African households now worse off than pre-Covid-19.
On total remuneration levels in the economy, the report indicated that average monthly remuneration in South Africa declined in nominal terms by 4.4% year on year (y/y)in quarter one (Q1) (from R16 192 in Q1 2022 to R15 473 in Q1 2023), while in real terms (deflated by the consumer price index), the decline was 10.7%.
BankservAfrica said while not definitively evident in the data yet, the pressure on salary earners could soon alleviate somewhat based on the notable moderation in consumer inflation from 7.1% y/y in March to 5.4% y/y in June, the first print back in the South African Reserve Bank’s 3-6% target band since April last year.
“The moderation in consumer inflation will go some way in reducing the extent of the erosion of purchasing power that households have had to deal with, especially in the past year,” Kruger said.
Current forecasts suggested that headline inflation could be at 5.0% y/y this month and average around 5.2% in the second half of this year which could bring more good news.
The job market, however, remained uninspiring as indicated in BankservAfrica’s data adjusted for weekly payments. With fewer salaries paid into the bank accounts of South Africans in each of the past three months, cumulative job losses of almost 200 000 were recorded in the second quarter of this year.
“With little indication that a different economic environment will play out in the second half of 2023, the job market and salary adjustment are likely to remain lacklustre in the remainder of 2023, a scenario that could only exacerbate South Africa’s unemployment crisis,” Kruger said.
The BankservAfrica Private Pensions Index (BPPI) ticked up in both nominal and real terms during June, continuing its outperformance trend.
“The average nominal private pension increased to R10 734 in June compared to the previous month’s R10 285, 7.2% higher than one year earlier and the highest monthly payment so far in 2023,” Naidoo said.
In real terms, the average real private pension in June this year came to R9 825, 1.7% higher compared to a year earlier. Kruger believed this signals the purchasing power of pensioners has largely been preserved amid the high inflation environment.
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