Salaries ‘not keeping pace’
SPENDING ABILITY: PAY HIKES NOT INFLATION-RELATED OVER PAST TWO YEARS – SURVEY
‘Pressure on income is evident in dwindling retail sales growth.’
Ongoing economic challenges hampered companies’ ability to pay inflation-related salary increases over the past two years, including significant increases in the operating cost environment, partly due to the impact of load shedding, as well as global factors that took a toll on companies’ profits.
However, the BankservAfrica Take-home Pay Index (BTPI), which tracks the average nominal take-home pay of about four million salary earners in South Africa, ended 2023 on a slightly better note, as salaries and private pensions performed better than a year before.
“The average nominal takehome pay was 5.6% higher at R15 409 in December 2023 compared to the R14 596 recorded in December 2022,” said Shergeran Naidoo, BankservAfrica’s head of stakeholder engagements.
But the average nominal takehome pay in 2023 was only slightly better than the averages noted in 2022 and 2021. With inflation on the rise during this period, salary earners were worse off in real terms for the third consecutive year, he said.
“This pressure on disposable income is evident in the dwindling retail sales growth, with real growth for the 11 months to November 2023 at 1.5% lower than the previous year, while car sales also contracted in 2023,” said economist Elize Kruger.
After declining for three consecutive months, annual growth in the average real take-home pay was flat in December 2023.
The real take-home pay at R13 732 in December 2023 was slightly higher than in November, but for the year, average real takehome pay dropped by 4.7% compared to 2022, she said.
“With international oil prices and the rand exchange rate expected to be stable on an annual average basis in 2024 and food price inflation forecast to moderate further, consumer inflation is expected to average around 5.2% compared to 6.0% in 2023.”
Kruger said lower inflation, with a possibility of lower interest rates this year, could provide much-needed support to households regarding spending ability and confidence levels this year.
Statistics SA’s latest Labour Force Survey confirmed the indications from BankservAfrica’s sample, which represents about 25% of the broad labour market.
According to the survey, 399 000 jobs were created in the third quarter of 2023, while the official unemployment rate moderated to 31.9%, down from 32.9% a year earlier.
Adjusted for weekly payments, BankservAfrica’s sample signals that 430 000 more salaries were paid in the fourth quarter, which should see the unemployment rate moderating further, Kruger said.
The BankservAfrica Private Pensions Index (BPPI) slipped marginally in nominal and real terms in the last five months of 2023, but remained in positive territory on an annual basis.
“The average nominal private pension fell slightly to R10 606 in December, compared to the previous month’s R10 647, but it is still a healthy 5.7% higher than a year earlier,” Naidoo said.
In 2023, the average private pension of R10 657 was 6.8% higher on a year-on-year basis, signalling that the purchasing power of pensioners represented in the BankservAfrica database had endured even in the high inflation environment. The average BPPI increased by 0.8% in real terms in 2023, beating inflation levels.
The value of total take-home pay payments processed by BankservAfrica increased by 6.0% in December 2023 in nominal and real terms and private pension payments by 0.8% compared to a year earlier on a nonseasonally adjusted and smoothed basis.