Salary index shows 5.6% increase in formal sector salaries

BankservAfrica’s Disposable Salary Index (BDSI) for January 2015 shows that disposable salaries have increased 5.6% in the last year. The index also shows that the average banked salary for 2015 stands at R12 286 for the month compared to R11 637 in January 2014.

“The 5.6% increase over the year indicates that those in formal jobs are getting meaningful increases which are above estimated inflation,” says Dr Caroline Belrose, Head of Fraud and Data Analytics at BankservAfrica. “This also means that after taking inflation into account, take-home pay rose approximately 0.6% over the last year.”

This strong showing of salaries paid into bank accounts via the South African payment system corresponds with the 20% increase in personal income tax collected in December 2014 versus the same month in 2013. Average disposable salaries increased by 8.8% over the same period.

With the decline in petrol prices BankservAfrica is expecting retail sales and other consumer orientated sales to show growth in the coming months.

After adjusting for inflation, the last five months have shown positive, real increases which average 2.7%. This strong showing by disposable salaries demonstrates that the income side of the labour market remains fairly strong and that those in formal jobs continue to benefit.

The rise in salaries over the last two years can also be analysed by examining the proportion of accounts or people receiving a take-home salary in a specific range expressed as a percentage of the total.

“There has been a 3.1% decline in the proportion of those who receive less than R4000 a month in their bank accounts,” says Mike Schüssler, Chief Economist at Economists.co.za “This indicates a declining number of people earn less than R4000 per month from their employment. In actual values this category is down 12.8% from January 2013.”

Private pensions increased at brisk pace in January

Alongside the BDSI for January, BankservAfrica also released their Private Pension Index (BPPI) for the same month. The indicators, when combined, provide invaluable data to financial organisations and government’s economic policymakers when it comes to drawing conclusions on economic activity.

The BPPI, South Africa’s only private pension indicator, increased by 9.6% on a year-on-year basis to R5 735 per month. The average pension was 46.7% of the average January salary, up from 45.2% in January 2014. Interestingly salaries declined on seasonal factors in January when compared to December 2014 while pensions showed a R13 increase from December.

The median, or typical private pension, had a substantial increase of 9.9% to R3 834 – its highest ever level.

“The real increase for the average private pension, estimated at 4.5%, indicates that South Africa’s average pensioner is keeping up with inflation,” says Schüssler. “This can be attributed to good investment performance by South African retirement funds from increasing assets such as equities and commercial property.”

The BPPI also showed that although only 47% of all private pensioners still receive a pension of less than R4 000, this is up from 43.2% in January 2014. The number of private pensioners receiving more than R10 000 in their bank accounts was 15.8% of the total in January 2015 – nearly 5% up from January 2013 when these pensions accounted for just 10,8% of the total.

The number of private pension payments on the BankservAfrica payment system decreased from 641 148 in January 2014 to 620 650 in January 2015.

“At this time, we are unsure of the reason for the decrease as the number of pensioners remain fairly constant between 615 000 and 649 000 every month. We hope to further interrogate this date in future indices,” Belrose concludes.