Take-home pay recovered marginally in August, as salaries data continue to suggest some more job creation, according to the latest BankservAfrica Take-home Pay Index, out Wednesday (28 September). The impact from the rising inflation should start to moderate towards year-end, the clearing house says.
The index is calculated on a monthly basis by dividing the total value of salaries paid into the bank accounts of employees – excluding salaries greater than R100,000 per month – by the total number of salary payments, suggesting that the impact of rising inflation should start to moderate towards year-end.
August was another tough month for the South African economy, with lingering power supply problems, higher inflation and climbing interest rates all being the order of the day, said Shergeran Naidoo, BankservAfrica’s head of stakeholder engagements.
He said that despite these ongoing challenges, the nominal BankservAfrica Take-home Pay Index (BTPI) indicated the average nominal salary (after deductions) recovered marginally to R14,688 in August, compared to R14,360 in July 2022.
Though still down from the 2022 high of R15,614 in February and still 1.0% lower compared to a year earlier, a 2.3% increase was recorded compared to the preceding month.
For the year to date, however, salaries have lagged compared to average headline inflation, said BankservAfrica.
“It appears that the average salary has stabilised somewhat in August,” said independent economist Elize Kruger. “From a year-to-date perspective, however, salaries have lagged compared to average headline inflation.”
“In line with our expectation, consumer inflation moderated slightly off the 13-year high of 7.8% reached in July, to 7.6% in August. The moderation was driven by lower fuel prices, but the notably higher food prices offset the impact somewhat.
“The South African Reserve Bank also hiked the benchmark interest rate by a further 75bps in September and signalled that more hikes could be on the cards, clearly signalling that the average salaried person’s finances are likely to remain strained. This is reflected in the 8.0% y/y decline in the real average salary recorded in the BTPI in August.
“However, as we forecasted that July’s 7.8% headline CPI print would be the upper turning point of the current inflation cycle, the pressure should start to alleviate somewhat as inflation moderates towards year-end. We forecast that inflation could be around 6.6% by year-end,” Kruger said.
While the BTPI does suggest that consumers’ average earnings are under severe pressure, the group said it has flagged in recent reports that its data signalled that more people are receiving salaries compared to a year ago.
The BankservAfrica indications were indeed confirmed by the actual data, as reflected in StatsSA’s latest Labour Force Survey, reporting that a notable 648,000 jobs were created in Q2 (vs Q1’s 370,000), despite the challenging economic environment.
The BankservAfrica August data again signalled that more jobs were created, but the pace of new job creation has clearly moderated somewhat, probably reflecting all the economic headwinds.
Average private pensions have held up well despite rising inflation
The BankservAfrica Private Pensions Index (BPPI) meanwhile, showed that the average nominal private pension reached R10,000 per month for the first time in June and remained above this level for the third consecutive month, representing an 8.5% growth on a year-on-year basis.
In real terms, the average real private pension was slightly lower than in July, at R9 655 in August, a mere 0.8% higher than a year earlier. Although there were a few monthly real declines recorded in the first half of the year, average real pensions have held up reasonably well despite rising inflation, preserving the purchasing power of pensioners.
The total take-home pay and private pension payments processed in value terms increased by 4.7% in real terms and by 12.7% in nominal terms compared to a year earlier, not seasonally adjusted.