Take-home salaries increase, pensions top inflation

The average take-home pay crested R13 000 in July for the first time, and increases in take-home pay averaged 8% over the last twelve months, according to the BankservAfrica Disposable Salary Index (BDSI).

Despite the 5% inflation rate increase the average actual salary was R13 301 in July indicating that the last round of salary increases are still leaving the average employee better off, with data indicating that salaries paid into bank accounts are 2.9% above inflation over the last year. Formal sector employees who earn up to R100 000 per month are also seeing their salaries increase across the board.

“These numbers are being seen despite higher personal income tax rates and higher medical insurance deductions. This shows that a broad range of South African employees have seen positive real salary increases over the past 12 months, not just top management and professionals,” says Mike Schüssler, Chief Economist at Economists dotcoza.

The median salary increased by 6% since July 2014 to R9 751 per month - a percentage higher than the inflation rate recorded for July 2015.

For the first time since BankservAfrica started collecting take-home pay data, the share of people netting between R10 000 and R25 000 reached 36.6%. In total 46.1% of South Africans paid via the BankservAfrica payment system clear R10 000 or more.

The remaining 53.9% of employees receive less than R10000 per month.

While these only detail electronic payments, and exclude cash and intra bank payments, South African formal sector employees continue to beat inflation.

“The noted decline of 21% in the number of accounts which receive less than R4000 per month has been phenomenal. More than 80% of South African employees in the formal sector are now earning take home salaries that are above R4 000 per month,” says Dr Caroline Belrose, Head of Fraud and Data Analytics at BankservAfrica.

Pensions soar above inflation

Average and median pension payments to private pensioners increased by 9.1% to R5 854 and R3 357 per month respectively in July - 3.9% higher than inflation, a clear indication that, in the last year, private pensions have grown far faster than salaries.

“These figures show that pensioners have a much lower income, but that income is at least growing at a far better rate than before,” Schüssler said. “As pension pay outs are typically based on previous years’ asset performance and adjusted annually, this trend should continue at least until the end of the year.”

The impact will largely be felt in the consumer space.

It is likely that the above inflation increases in both pensions and in disposable salaries will be positive for consumer spending, particularly retail sales as well as domestic travel as long as the petrol price remains relatively subdued.