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Take-home pay margin shifts as more lower-paid employees lose jobs – report

‘The UIF Ters was very, very supportive to people who had been adversely impacted by the lockdown’: Shergeran Naidoo – head of stakeholder engagements at BankservAfrica.

NOMPU SIZIBA: BankservAfrica released its take-home pay index for December 2020. It found that the number of employees estimated to have been paid over the December period actually declined by 5.4%, and found that the real average take-home pay rose by 2.1% on a year-on-year basis.

Well, to unpack these findings for us, I’m joined on the line by Shergeran Naidoo. He’s the head of stakeholder engagements at BankservAfrica. Thank you so much for joining us Shergeran, and a belated happy new year. In your report you talk about the increase or decrease in take-home pay in nominal and real terms. Just tell us what your findings were around average take-home pay, and what some of the factors underlying the outcome were.

SHERGERAN NAIDOO: Good evening, Nompu, and good evening to your listeners. A belated happy 2021. Hopefully this is going to be a better year for all of us.

To your question, before we get into unpacking the data, there were a number of factors that led to not being able to have this clear line of sight in terms of the analysis that we are used to put out into the market. That’s because of the impact of the Ters payments and so forth on the payment system.

Obviously the UIF Ters was very, very supportive to people who had been adversely impacted by the lockdown. But what had happened was, because of either the number of applicants or whatever processing factors might’ve happened in the background, we found that there were large numbers of Ters payments in some months, and in other months there were no payments at all. So you found that it made it very lumpy, and resulted in the processing of data being not as squeaky clean as it should be, and as we are accustomed to.

So this impact, this haphazard or swings-and-roundabouts kind of impact had an impact on taking the data, and the clear line of sight that we would have liked to have had to be able to say with absolute certainty what the impact has been on the salary earners in South Africa.

So we are anticipating that in the next couple of months, once all of the noise of the Ters payments comes out of the system, we would be able  to make a better analysis with what’s coming through the system. I just thought I’d put that out there, because I think that that was something that we went to great lengths to mention in our press release, in our report, purely because it was an anomaly.

But, that being said, there has been an increase, almost, in terms of the average take-home pay. But that’s only because of the decrease in the number of people that were actually paid through the system. So it’s not really a good-news story on that front.

Overall, there’s actually been a 2% reduction on a year-on-year basis, which gives us a sense of more or less how bad December 2020 was compared to December, 2019. So December 2020 was compared to December 2019, and December 2019 had been a particularly bad number, because it was actually 4% less than December 2018. So if you’re looking at a 2% [increase] on  December 2019, then I think, even if you’ve got a basic maths understanding, you’ll know that it doesn’t augur well for the accuracy.

NOMPU SIZIBA: You are already coming from a low base in any event. But, from your analysis that I was reading, it sounds like you observed that there were a lot of lower-paid people who were no longer getting an income. So one perhaps assumes that they’ve been laid off, or furloughed, or whatever it may be, and that’s what helped to translate the higher average take-home pay number. Do you suspect that that’s temporary – or possibly permanent?

SHERGERAN NAIDOO: The caveat I kind of gave at the outset is the card I’m going to pull out now. We’ll only really know that in the next two months. The reality is yes, there have definitely been industries that are so badly affected that we won’t know the real impact until we actually see the true data that comes through the systems. And the only time that we’ll get that is when there is more clarity and the Ters noise actually comes out. But our guess is that you’re going to find that the tourism sector, the hotel industry, the restaurant industry – all of those – are certainly going to be guys that are going to be seeing the cut.

NOMPU SIZIBA: Absolutely. You also issued your Private Pensions Average Income report. What were your findings there, and how did they compare with the same period in December 2019?

SHERGERAN NAIDOO: In the private pensions there was actually real growth. In real terms it was R7 483 – and in real terms this was the highest growth since December 2018. However, we found that there were approximately 625 000 private pensions paid in December 2020, which was a 2.5% annual decline. So what we’ve observed is that there had been six consecutive months of decline in actual private pension payments.

So I’m getting a sense that people have actually been withdrawing more out of their pensions, which has resulted in there being fewer actual pension payments being made.

So, even though you’ve got a higher average, the reality is that the base of private pension recipients is actually declining, which I think could be something to look into in the future because it might indicate that a lot of people have actually had to withdrawal additional payments to be able to sustain themselves during this period.

NOMPU SIZIBA: That is a worry. Shergeran, we’re going to leave it there, but thank you so much for your time. That was Shergeran Naidoo, the head of stakeholder engagements at BankservAfrica.

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