Average salaries grow just above inflation

Cape Town - The average South African salary grew just above the estimated rate of inflation, according to the BankservAfrica Disposable Salary (BDSI) data released on Wednesday.

According to the index the average disposable salary grew 6.7% year-on-year, compared with the 7.3% y/y growth recorded for April 2016.

 
“The higher monthly average trend is likely to continue, in line with the anticipated public sector wage increases,” said Mike Schüssler, chief economist at Economists dotcoza.

Although the BDSI median salary did not grow as rapidly, 50% of individuals with monthly take-home salaries paid into their bank accounts received at least R9 679 in May.

“This typical take home salary grew below inflation for the second time this year, reflecting that the lower inflation rate of 2015 is having an impact on the typical take-home pay as present inflation is far higher than the 4.6% average seen last year,” explained Schüssler.

The increase in the median take-home pay growth was the lowest since May last year, when the median also grew by 3.3%.

BankservAfrica said it now has four years of data on take-home pay, which enables insight into the debate on minimum salaries. The data reveals that individuals receiving between R10 001 and R25 000 into their bank accounts make up 38% of the broad take-home pay category.

This group reflected “astounding growth” of 45% from May 2012 to May 2016, BankservAfrica noted.

There was also a significant decrease in the group of individuals in the income category of R4 000 to R10 000.

“The average take home pay increased by 24.3% over that period despite medical insurance and tax rates increasing far above that rate. The median take-home pay increased by 25.9%,” said Dr Caroline Belrose, Head of Knowledge and Risk Services at BankservAfrica.

Inflation increased by 25.1% indicating that generally take-home pay increased more or less in line with inflation, she said.

According to Schussler higher taxes took much from the higher pay cheques as tax collections increased by 57.8%, averaging out at a 48% average increase.

"Medical insurance also went up by about 38%. As these are two of the big three deductions that employees have before money is paid into their bank accounts, it is therefore likely that both median and average gross salaries increased above the rate of inflation,” added Schussler.

Pension growth 

Banked pensions grew by 7.2%, the slowest year-on-year increase since January 2016, according to the BankservAfrica Private Pensions Index (BPPI).

However, Schüssler said the volume of pensioner accounts paid in May 2016 reflected a substantial increase, suggesting that once-off payments could have been made.
 
The average pension paid was R6 226 for May. According to Schüssler, it is interesting to note that the typical or median pension was R4 343 in the same month. This typical pension was up 12.5% and the best performer of all the main categories.
 
"It appears that pensions are increasing, albeit from a low base for retired people that receive a pension and not a government grant,” said Belrose.