February salary data reflects continuing return of casual and weekly workers

But, salaries are coming under pressure again

The recovery from the massive Covid-19 pandemic shock continues to be reflected in the monthly BankservAfrica Take-home Pay Index (BTPI), as the share of payments made to casual and weekly workers continued to climb in February 2022.

The BTPI, which measures the average South African salary, revealed double-digit growth on a year-on-year basis for the number of salaries paid to casual and weekly workers after a period of declines. However, this contributed to the decrease in the average salary.

“The average real take-home salary for February 2022 decreased by 4.1% to reach R15 517 on a seasonally adjusted basis,” says Shergeran Naidoo, BankservAfrica’s Head of Stakeholder Engagements. “On a nominal basis, the average take-home pay was 1.3% up at R16 022.”

BankservAfrica has adjusted the CPI basis in the BTPI to the new changes by Statistics South Africa, which came into effect in February 2022, which means that the real salary is linked to December 2021.

“We estimated that the February inflation rate would be 5.7%, which is in line with the announcement by Statistics South Africa this morning. We believe this increase will further aid the decrease in the real take-home pay of formal sector employees paid via the BankservAfrica system,” says Mike Schüssler, Chief Economist at economists.co.za.

With inflation likely to stay at over 5% - and even over 6% - for several months, take-home salaries will face declines for a lengthy period that could be closer to a year.

The current war between Ukraine and Russia has also impacted major commodity prices - from oil to wheat prices - which will impact inflation in South Africa and globally. As most salary agreements conclude retrospectively, take-home pay will take a while to catch up to these developments.

Owing to the higher inflation rate and the crisis in Ukraine – which has led to soaring oil prices - many are expecting the South African Reserve Bank to hike interest rates at tomorrow’s MPC meeting. Although household borrowing among South Africans has eased to below the inflation rate, the hike could lead to higher mortgage repayments. Together with the escalating food prices and rising fuel costs, this could put South African salaries under even more pressure.

“We expect consumer expenditure, such as retail sales, to continue growing moderately for the time being and as the economy drives employment again,” says Schüssler.

Returning to the February data, the overall take-home totals paid into all the bank accounts of employees increased by 0.6%.

February 2022 was the first time since September 2019 that the total monthly equivalent payments increased to over 4 million again. While this data is very volatile, it suggests that most – not all – of the employment from the Covid-19 shock have recovered.

“The average private pension, as tracked by BankservAfrica, increased by 0.5% in real terms to R9 667,” says Naidoo. This index has also been adjusted to the base period in December 2021, per the CPI base change.

The number of private pensions banked via this system remains relatively stable at around the 650 000 mark.

The seasonally adjusted nominalised private pension in South Africa, as measured by BankservAfrica, was R9 821 following a 6.2% year-on-year increase.

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