What you take home up this year

TAKE-HOME pay in September increased at a slower rate than August due to the majority of backdated government salaries having been paid out.

Interestingly, the BankservAfrica data reveals that there have been minimal increases to the average take-home pay since September 2013 – providing a strong indication of the struggling economy in the last five years.

Take-home pay in September showed a year-on-year increase of 2.2%, a decline from the 4.7% yearon-year increase in August.

According to Shergeran Naidoo, Head: Stakeholder Engagements at BankservAfrica, on a month-on-month basis, BankservAfrica’s seasonally adjusted take-home pay declined by 1.4% between September and August due to the backdated salary payments and higher personal taxes.

The average take-home pay was R15 299 in September. In real terms, the average take-home pay was R14 256. “Take-home pay increased in real terms for most of 2018 and we expect this to continue until the end of the year. However, 2019 could bring some change as inflation is expected to increase along with the continued poor growth performance of the South African economy,” says Mike Schüssler, chief economist at Economistscoza.

Higher inflation often leads to salary increase lags. Although takehome pay does increase slightly above the inflation rate, other factors such as higher personal taxes caused by “bracket creep” has an impact too.

According to Schüssler, the average take-home pay increased by only 2.8% above inflation since September 2013. “As such, the average rate of increase is only around 0.5% year-on-year, and tells the story of an economy struggling to create growth and wealth.

Interestingly, gross salaries increased by around 4% in the last five years to June this year after inflation – approximately 1% faster than inflation for the five years to September, according to BankservAfrica’s estimates.

“The difference between the two average rates of increase is down due to the rise in personal taxes that did not fully compensate for inflation as government struggles to increase revenue to balance the budget,” says Schüssler. This could be addressed in the upcoming Medium-Term Budget Speech today.

The BankservAfrica Take-home Pay Index shows the overall nominal takehome pay increased by 45.3% while personal tax collections increased by 70.6% since August 2013 to August this year. |