Latest BDSI shows all the numbers are up – but artificially so
Dr Caroline Belrose, Head of Knowledge and Risk Services at BankservAfrica.
The BankservAfrica Disposable Salary Index (BDSI) April results showed an unusual spike in payment values because civil servants received an increase, which was paid three months late last year, distorting the year-on-year data.
BankservAfrica tracks salary and pension payments made via the payments system in South Africa, which provides great insight into total, as well as average payments into individuals’ bank accounts.
“The civil servant increase had a substantial impact on salary increases for just over a quarter of salaries being measured. The data captured in the same financial year creates the impression that they effectively received two increases over the period of a year, due to the late payment last year. This has had a massive influence on the numbers this month, as have the high pension increases,” explains Mike Schüssler, Chief Economist at Economists dotcoza.
Average take-home pay showed a 7.4% increase on a year ago, according to the BDSI. The average disposable salary was R12 877 in April 2016 compared to R11 985 in April 2015. The actual increase in average take-home pay was R892 over the last year.
Dr Caroline Belrose, Head of Knowledge and Risk Services at BankservAfrica, explains that while this is 1.1% higher than inflation, this number is artificially high as last year’s government negotiation with its employees caused a three month payment delay. BankservAfrica anticipates that this will also result in an artificially temporary higher rate of increase in May and June whilst the effect of this situation is still being felt.
“Likewise, banked pensions continue to increase at a faster rate than disposable salaries – pensions increased by 8% on a year ago. While the JSE did not fare that well, this increase might be explained by retirement funds increasingly investing money off-shore and the weak Rand, which is helping to increase pension payments,” says Schüssler.
Over the last year that average pension payments have gone from being under 44% of average salaries in July 2015 (due to the government salary back pay-out during that month) to just less than 48% now. While pensioners are still paid at less than half the level of salaried workers, their increases have nevertheless been surprising over the last few years.
“The average pay-out has gone from around R4 750 at the end of 2013 to just over R6 200 in March 2016. This is an increase in the average pension of about R1 500 per month – just above the total amount that an old age grant represents,” says Belrose.
The total value of payments to both pensioners and employees combined shot up by 8.7% when compared to a year ago. The total salary payments went up by 7.4% with no major change in the number of salaries paid. However, both the number of pensioners and the average pension increased, resulting in total amount of pensions paid increasing by 12.6%.
The 8.7% increase is 2.4% higher than the inflation rate and may just help keep retail sales and other consumer consumption expenditure higher than initially thought.
