Take-home pay drops in October

BankservAfrica index shows real disposable income declined owing to a high base in 2014.
Mike Schüssler

South Africans took less money home last month, than they did in October 2014. The BankservAfrica Disposable Salary Index (BDSI), released on Wednesday, revealed a 2.1% decline in the real disposable incomes of the country’s formally employed population.

According to the report, salaries paid into people’s bank accounts increased by 2.5%, but because the inflation rate was at 4.7%, the purchasing power of the money had fallen.

It is an unusual occurrence and has only happened for the second time this year (May being the other month).

BankservAfrica said the decline, which saw the average take-home pay fall by R150 to R12 840 compared with the previous month, could be explained by a downturn in the economy, people earning less over time and less commission as a result of the tougher business environment. The more likely reason was the higher base of October 2014 caused by back-dated pay coming in after the conclusion of wage negotiations.

“If you remember last year, we went through a lot of strikes,” said economists.co.za chief economist Mike Schüssler. “In the latter half of the year, for example, there was a Numsa (National Union of Metalworkers of South Africa) strike, so back-dated payments in September and October last year will have contributed to the high base.”

He added that there was also a situation earlier this year when the South African Post Office didn’t have money to pay salaries and the lion’s share of back-dated payments came in later during August and September, with salaries returning to normal in October.

“Local government employees also received an increase recently and it may be that the last of that back-dated pay showed up in the September figures,” said Schüssler, adding that salaries data for the coming months is expected to reflect normal patterns.  

Nevertheless, the BDSI shows some improvement in formal employment, as the proportion of people earning more than R10 000 per month in disposable income has risen from 31.7% of the total in October 2011 to 48.4% in October 2015.

“A 61% increase over four years is a very big achievement and shows that people in formal employment are doing very well,” said Schüssler.

Similarly, the BankservAfrica report revealed the following:

  • the number of people who take home more than R50 000 has more than doubled in that time,
  • the number of employees receiving R300 000 but less than R600 000 per year in their bank accounts has increased from 5% to 8.4%
  • the number of people getting between R120 000 and R300 000 has increased from 26% to 38.4%.

Pensions, meanwhile, continued to beat inflation, with the average disposable private pension increasing 9% year-on-year to R5 946. However, Schüssler said that was a continuing trend which is more a reflection of the low base that pensions income have historically been at.

BankservAfrica recorded payments in October in about 640 000 pension accounts and an estimated 3 120 000 monthly equivalent salary cheques, bringing the total amount of payments captured through the system to around R48.9 trillion.

BDSI and BPPI compared in nominal terms

BDSI and BPPI compared in nominal terms

Source: BankservAfrica and Economist.co.za

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