Good news for take-home pay in South Africa

Nominal take-home pay has grown as the operating conditions for the private sector improved.

According to the latest BankservAfrica Take-home Pay Index (BTPI) for September, nominal take-home showed monthly and annual growth for the third month in a row.

“The nominal take-home pay of R15,673 in September was a marginal growth on the R15,605 recorded in August and 4.1% higher than the R15,056 in September 2022,” said Shergeran Naidoo, BankservAfrica’s Head of Stakeholder Engagements.

The BTPI improved by 6.8% from the R14,623 in Q2 and the R15,610 in Q3, indicating that 2023 could be a better year for salaries than 2022.

“While the ability for companies to pay inflation-related salary increases was hampered in the past 18 months, especially by a rising operating cost environment, industries have generally become more resilient to the effects of load shedding,” said Elize Kruger, Independent Economist.

“If sustained, the somewhat better conditions in the private sector could provide better employment and remuneration prospects in the coming months.”

In somewhat negative news, the average real take-home pay dropped after two months of growth – declining from R14,278 in August to R14,239 and dropping 0.8% compared to the previous year.

The slight drop was due to headline inflation rising sharply from 4.8% in August to 5.4% in September, driven by higher fuel prices.

Although fuel prices are expected to decline sharply in November, headline inflation is expected to stay between 5.0% and 5.7% for the next year.

Consumer inflation is, however, expected to decline from 6.9% in 2022 to 6.0% in 2023, with further moderation to 5.3% in 2024.

BankservAfrica said that interest rates have likely plateaued but noted that they could remain elevated for a while due to the upside inflation risks due to Rand’s weakness and higher fuel prices.

“With household finances already under severe pressure, this scenario remains negative for the spending ability and confidence levels of consumers,” said Kruger.

In another boost, data on weekly payments shows a slight pick up in the job market in Q3.

The BankservAfrica sample – representing roughly 25% of the labour market, saw 75,000 more salaries paid over the quarter.

This can build on the 39,000 jobs that were created in the non-agricultural formal sector in Q2 as per Stats SA’s Quarterly Employment Survey and the 154,000 more people employed in the formal, informal, agricultural and household sectors in the statistics body’s Labour Force Survey.

“While each new job opportunity should be celebrated, the stark reality is that South Africa’s population growth far exceeds its economic or job growths over the past number of years. As such, the unemployment rate remains stubbornly high (32.6% in Q2),” said Kruger.

The BankservAfrica Private Pensions Index (BPPI) dropped slightly in nominal and real terms in both August and September, but it remains in positive territory on an annual basis.

“The average nominal private pension fell marginally to R10 758 in September compared to the previous month’s R10 780. It remains a healthy 8.7% higher than one year earlier,” said Naidoo.

The average private pension reached R9,727 in real terms, which was 3.2% higher than a year earlier. This shows that the purchasing power of pensions of those in the BankservAfrica database remained strong despite the high inflation environment.

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