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Johannesburg- Take-home pay and private pensions started off 2018 on a stronger footing than in 2017, according to data measured by BankservAfrica, signalling an improvement in consumer confidence could lie ahead.
South Africa’s average formal sector take-home pay was R14 675 in January, representing a 5.8% year-on-year growth and a 1.2% increase if seasonally adjusted for inflation.
January’s take-home pay was the slowest increase in five months, but BankservAfrica said on Wednesday that the figures in recent months reflect a positive real increase for money banked by employees. This points to a gradual rise in living standards for most formally employed people.
The BankservAfrica Take-home Pay Index is a reflection of pay trends in the formal economy paid via the South African payments system.
The number of people earning monthly between R12 000 and R16 000 was 474 700 in January, while 436 900 earned below R4 000. This income bracket saw a decline of 7.8% during 2017, and the number of higher paid employees now outnumber lower income earners.
BankservAfrica doesn’t expect the national minimum wage of R3 500 per month, which is expected to be implemented from 1 May 2018, to have much of an impact on formal sector salaries processed through the formal payment system.
Pensions growing faster than take-home pay
The Private Pensions Index shows that pensions increased substantially year-on-year in January as the average pension reached R7 072. Stripping out inflation, this represents an increase of 4.8% or a pay out of R4 654 for a typical (median) pensioner - the biggest rise since September 2015.
Pensions in January came closer to catching up with salaries, with the average South African pension paid reaching 48.3% of the average take-home pay for the first time since BankservAfrica started measuring pension data in 2012.
Pensions are becoming increasingly important to the economy as pension pay outs have increased faster than take-home pay in the majority of 2017. The number of pensioners is also increasing and, according to data from Statistics South Africa, the population bracket of people over 65 years of age is experiencing the fastest growth.
BankservAfrica said that, while it’s impossible to predict data into the future, the lower inflation expected in the first three months of 2018, “bodes well for the chances of positive after inflation increases for both take-home pay and private pensions”.
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