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Backdated salary payments in the public sector continued to spur the increase in BankservAfrica’s Take-home Pay Index for August.
Real salaries showed improvements on both an annual and monthly basis, BankservAfrica announced on Wednesday.
According to Shergeran Naidoo, head of stakeholder engagements at BankservAfrica, average South African take-home salaries increased by 4.7% in real terms on a yearly basis.
This represents the largest annual percentage increase in the BankservAfrica dataset since 2012. “In August, we saw the monthly average real take-home pay reach R14 460 in real terms,” he adds.
August’s figure was 2.7% higher on a seasonally adjusted basis than July. However, Naidoo expects the rate of increase to slow from the current, very high rate.
“The strong increase is largely due to the continued delay in government backdated salary adjustments in the preceding months, which were paid in July and August. Delays in municipal and Eskom salary adjustments also contributed to backdated salary payments in August,” explains Mike Schüssler, chief economist at Economists.co.za.
The other reason for the large real average take-home increase was the decline in inflation, which enabled higher real increases. Inflation unexpectantly declined from 5.1% in July to 4.9% in August.
The take-home pay of the "typical person" - that is the person in the middle of the earnings distribution - showed an increase of 1.6% after inflation.
According to Schüssler, the rate of take-home pay increase is likely to stay higher than usual as other wage settlements are still expected in the coming months from large sectors with many employees such as mining.
In real terms, the real average take-home pay was up by 4.4% since August 2013. Schüssler points out that, considering that the biggest numbers of employees receiving backdated salaries were from the public sector, this increase may not be evident in other parts of the economy.
The previous record level of take-home pay in November 2017 is 0.5% lower than the new record level set in August 2018. “One would expect that consumer spending, particularly retail sales, will benefit and remain positive for August and September as the extra take-home pay is likely to aid discretionary spending by consumers,” says Schüssler.
“As such, private consumption expenditure in the third quarter will most likely be substantially higher than the second quarter when employees are still in doubt about the rate of salary adjustments and timing of their actual backdated payments.”
Pensions
Real average private pensions (therefore excluding old age grants and social pensions) increased by 4.2%, showing its slowest y/y increase, according to Naidoo. However, he adds that the average BankservAfrica Real Private Pension Index (BPPI) showed a 16.1% increase over the last five years.
This indicates the average private pensioner has seen better results from their pension increases compared to those with salaries.
The BPPI in real terms is R6 888, which is 48.4% of what the average salary is. The BankservAfrica data shows there are now more than 710 000 pension payment to private pensioners each month.
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