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Johannesburg - South African salary earners have on average taken home 7.5% more in pay in March than a year ago, way above the 4% inflation increase for the same month, the BankservAfrica Disposable Salary Index (BDSI) showed on Wednesday.
According to BankservAfrica the March BDSI is typically the lowest of the year as state, and state-owned 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
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However, compared to March 2014 - where disposable salaries were R10 919 - the BDSI is 7.5% higher.
The number of people in the highest income category (those earning between R50 000 and R100 000) in the BankservAfrica Disposable Salary Index, showed the highest growth (+22.7%), while the number of people in the lowest income category (those earning less than R4 000 per month) declined by 10.9%.
In the last 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, BankservAfrica said.
People at the bottom declining
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, BankservAfrica said in a statement.
In addition to the BDSI, the BankservAfrica Private Pension index (BPPI) also showed percentage increases way above inflation.
Said Dr Caroline Belrose, Head of Fraud and Data Analytics at BankservAfrica: “Inflation for March increased by 4% while take-home 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.”
“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,” added Mike Schüssler, chief economist at economists.co.za.
BankservAfrica, however, cautioned that the higher tax rate announced in the National Budget in February 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."
The index showed that the number of people earning over R25 000 in take-home pay also increased by over 16%. “This indicates that, although the median disposable salary was under R9 000 for March 2015, the number of wealthy salary earners is growing rapidly and the number of people at the bottom are declining,” said Schussler.
The indication is that the gap between those in formal sector work and others is increasing, he said.
Pensioners
On the pensioner index BankservAfricsa said it seems that pension payments are likely to set a new record in the length of time that increases have been above inflation.
While the average pension of the 635 000 pensioners was R5 656 in March 2015 the change was a very strong 9.6% on a year ago with the average pension reaching 48.2% of disposable salaries - the highest since BankservAfrica started compiling the data in mid-2012.
More surprising was the fact that the median pension had increased by 11.7% which is the second month of more than 10% growth in the median. This means that the typical pensioner this month did much better than a year ago.
It is possible that this index has been influenced by some extra pension payments to Transnet pensioners etc., as median pensions also outstrip the growth of average pensions, and average salaries as well as median salaries.
Perhaps pension payments are doing so well after a few good years of high investment returns – it is quite unexpected that typical pensions are growing this fast.
However the typical or median pension is still only R 3 755 per month and certainly does not make that pensioner wealthy by any stretch of the imagination.
Retail sales growth
Overall, the last few months have seen exceptional growth for both take-home income types going through the South African payment system, said BankservAfrica.
However, BankservAfrika cautions that with inflation well below its trend, the up-trend in earnings cannot last and eventually the high performances will return to a more normal level.
The growth in take-home salaries and pensions bodes well for retail sales growth which is likely to be one of the stronger sectors in the SA economy yet again.
“We expect real consumer spending to continue to increase above 2.5% and therefore be much stronger than the overall economy,” said Schüssler.
