Salary and pension index shoots up
THE BankservAfrica Disposable Salary Index (BDSI) and the BankservAfrica Private Pension index (BPPI) are both showing percentage increases that are way above inflation.
The March BDSI is typically the lowest of the year as state, and stateowned salaries are increased from April, while the private sector starts increasing salaries from June onwards.
So, it is no surprise that the March disposable salary index dropped to R11 738 from R11 971 in February. However compared to March 2014 where disposable salaries were R10 919 the BDSI is 7.5% higher.
In real terms, after taking inflation into account, the increase is 3.3% making it the seventh month in a row that disposable salaries have beaten inflation. Inflation for March increased by 4% while takehome salary increased by 7.5%.
Pensioners saw their average income increase by 9.6% again, faster than take-home salaries for the fourth month in a row,” says Dr Caroline Belrose, head of Fraud and Data Analytics at BankservAfrica.
With inflation likely to remain below 6% for most of the year, it is likely that positive, real increases will be the order of the day for a few more months,” says Mike Schüssler, chief economist at Economists.
However, the higher tax rate may already have started to have an effect as the personal tax year runs from March to February.
Therefore, the average BDSI could already be slightly lower due to the effective tax increase on higher earners. This may have made March 2015 lower than expected on the average disposable salary numbers.
In March 2015, the number of people in the lowest income category (those earning less than R4 000 per month) in the BankservAfrica Disposable Salary Index declined by 10.9%, and only 42% of disposable salary payments were over R10 000.
The number of employees earning between R4 000 and R10 000 also declined but by only 1.7% when compared to a year ago.
The highest growth this month was in the highest category: those earning between R50 000 and R100 000. This category saw an increase of 22.7%, albeit from a very low percentage of the total number of payments.
The number of accounts in this category is now close to 50 000 out of 3,179 million or 1.6% of the total.
In the past 27 months the number of accounts taking home between R50 000 and R100 000 grew by a least 17%.
This is despite effectively higher tax rates on this group of individuals demonstrating that they are probably still best able to fight off tax increases.
The same applies to those earning over R25 000 in take-home pay. The BDSI shows that their numbers have increased by over 16%,” says Schüssler.
This indicates that the number of wealthy salary earners is growing rapidly and the number of people at the bottom are declining.”
The gap between those in formal sector work and others is increasing. The median salary was R8 653 and this was 8.5% higher than March 2014.