Disposable salaries adjusted for inflation take a dive
DISPOSABLE salaries, adjusted for inflation, declined last December. This is according to the latest BankservAfrica Disposable Salary Index (BDSI) data, which was published yesterday.
The survey notes a similar fall was experienced in the BankservAfrica Private Pension Index (BPPI), in which the December 2016 data reflected the first pension income decline.
“Real salary adjustments in December reflected the longest – and fastest – decline since the BankservAfrica BDSI data started in 2011. Furthermore, this is the seventh consecutive month… that salaries have fallen year on year in real terms,” said Dr Caroline Belrose, the head of information services at BankservAfrica.
On a year-on-year level, disposable salaries last December were lower than December 2015 and 2014. The BDSI data is smoothed on a three-month moving average basis and adjusted for weekly payments and pension payments and is based on salary payments cleared by BankservAfrica.
The 1.5percent decline is likely to impact consumers with income pressures resulting in reduced spend on major purchases such as cars, houses and furniture, said BankservAfrica.
“There is no doubt that most consumers were under pressure for most of 2016 and parts of 2015. The December BDSI suggests that this will continue in the first quarter (this year) as overall consumer expenditure is expected to remain subdued with lower than inflation salary increases likely to continue in the next few months,” said Mike Schüssler, chief economist at Economists.Co.Za.
However, as this year’s increases would be based on higher inflation last year, the real declines should stabilise as soon as the annual salary increases are implemented around the March to April period, the company said.
“Employees in the South African formal sector have certainly not had anything to cheer about in 2016 – the weak rand and drought had a devastating impact on real incomes and expenses of employees and their families,” said Schüssler.
The average employee received R14102 in their bank account in December while the median was R10 397. Both of these are in nominal terms.
There was a slight increase in the number of employees on the interbank payment system. This was 0.7percent higher than December 2015, BankservAfrica’s figures showed.
Private pensions showed real-term declines on a year-onyear basis. The December BPPI showed a 1.7percent year-onyear decline in real terms.
For the past two years, pensions have seen incomes increasing faster than employers. While the overall buying power of pensioners is still outpacing inflation, December’s data suggest the BPPI is starting to take strain from the stronger rand and the weakened equity market. – Go to www.busrep.co.za