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Middle class status in jeopardy - index

Johannesburg - While more South Africans are getting richer, many middle class workers' suburban dreams are being shattered, according to the latest BankservAfrica Disposable Salary Index (BDSI).

"The increase in low income earners may be due to more salaries being paid via the BankservAfrica system and this trend has been growing over the last years, especially amongst those who are paid weekly," explained Michael Rubenstein, head of corporate reputation and marketing at BankservAfrica.

"However, the other scary possibility is that there may be so many middle class earners with garnishee orders against them, that their income is being pushed down to lower income bands."

Debt Rescue CEO Neil Roets confirmed this middle class dilemma.

Roets has experienced steady growth in the number of clients seeking help by being placed under debt review.

"Many consumers will lose their middle class status and become impoverished due to the general increase in the cost of living and rising inflation," said Roets.

This comes at a time when South Africans' average disposable salaries have increased by more than 5% for two months in a row.

It may be the saving grace that is currently keeping the South African economy from going into a recession, according to Rubenstein.

Mining intrigue

Mike Schüssler, chief economist at economists.co.za, said an interesting feature of the latest BDSI is how it relates to the long-running strike in the mining sector.

"Despite the platinum strike website indicating that about R2bn in salaries were lost every month during the strike, the total salary bill, as reflected by the BDSI, still grew by 9.7% for the month of June," said Schüssler.

"The total number of payments also increased by nearly 9% and, as incredible as it may seem, real disposable salaries increased by 5.9% in June 2014."

Schüssler said adjustments, however, needs to be made for unusual payouts as these could influence the numbers.

"The overall message is that, despite strikes and layoffs, the BDSI data indicates that the overall salary bill is still rising and that those in formal employment are still getting increases in their disposable salaries that are above inflation," said Schüssler.

"Thus, despite at least 125 000 people being directly affected by the platinum strike, retail sales and total salaries paid have continued to increase without increasing credit growth."

More getting more, more people getting less

The number of high income earners has seen spectacular growth over the past year, according to the latest BDSI.

"Those earning between R50 000 and R100 000 per month has grown by an astonishing 21.7%," said Rubenstein.

"In fact, all segments earning a disposable salary over R10 000 per month grew in number of salary payments – mainly in double digits."

At the same time the number of people earning below R4 000 per month has jumped by 18.1% year-on-year.

The number of people earning between R4 000 and R10 000 per month - typically the middle class wage earners - declined by 4.2%.

The median disposable salary - the average salary weighted by the numbers of workers in the different income bands - currently sits between R9 000 and R10 000.

- Fin24

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