Salaries up slightly but pensions at record high
BankservAfrica’s latest disposable salary index shows a 0.5% increase in pay cheques to employees in the formal sector, after a 1.6% decline in September, while pensions reached a new high.
The index measures salary growth in SA, according to monthly salaries processed by the BankservAfrica payment system.
Mike Schussler at economists.co.za said the increase in October’s index beats inflation rates and is an improvement following September’s decline. He said September may have been an anomaly as far as salaries are concerned, but October’s increase indicates salaries are on track and have reached normality.
“We are still recovering in real terms from last year. In 2016, our real salaries in today’s money was over R14 100,” he said.
This year, the BDSI salary is R13 990 – R16 less than September but R62 more than October. In nominal terms, the BDSI recorded an average of R14 499.
“For more than a year people saw salary declines in real terms, and they are still recovering from that,” he said. Despite slow growth, Schussler said the 0.5% increase beats the current inflation rate. However, overcoming inflation is more of a good sign for pensioners than for people with salaries.
The BankservAfrica Private Pension Index (BPPI) measures a monthly time series of private pension income payments. It showed that pensions paid increased by 31.3% in September while the total amount increased by 38.6% before any smoothing and calculations.
The size of the extra payments to pensioners in October this year was a nominal R1.6 billion versus the same time last year. Schussler said this represented the biggest extra payment amount since April 2015. “In real terms, the value of the total pension payout was the highest on record.”
Real pensions averaged R6 457 for the month and R6 859 in nominal terms. For the first time on record, aggregate pensions were 13.5% of salaries paid. Since interest rates play an important role in the performance of pension payments, Schussler said the average pension had good and consistent performance over the last few years, especially in comparison to salary growth.
Schüssler foresees slow growth in real time salaries in November and December, but in March and April 2018 he anticipates only a 0% to 1% real growth in salaries.