In a dramatic turn of events for South Africa’s salaries, the real average take-home pay declined in March 2022 as the number of salaries paid shot up compared to a year ago, according to the monthly BankservAfrica Take-home Pay Index (BTPI).
The real average South African salary fell below the R15,000 mark in March 2022 and recorded one of the biggest annual falls on record at -5.6%.
“The average real salary was R14,969 in March, falling below the R15 000+ mark seen in the previous months,” said Shergeran Naidoo, BankservAfrica’s Head of Stakeholder Engagements. “The real BTPI annual decline of 5.6% is one of the biggest annual falls on record.”
However, the significant decline in average salaries hides the fact that more people are receiving salaries than last year.
The annual growth in the monthly estimate of employment numbers indicates the return of casual and weekly workers, and that most of the vulnerable sectors in the Covid-19 pandemic, such as tourism and entertainment, are making a comeback. More firms are hiring people at the lower end of the salary scale for new employment opportunities.
The thinking behind this stems from the odd movement between the increasing number of monthly paid employees despite the significant average take-home pay declines.
In the current economic context, we can deduce that this pattern has emerged from the employment growth within a specific sector or the expanding pool of younger, inexperienced employees in the overall economy, said BankservAfrica.
The average nominal salary in March was nearly R1,000 lower than the record R16,022 registered in February. In 2021 terms, the average take-home pay was R14,969. The March numbers are usually lower as the year-end bonus pay-outs fall out of the index’s smoothing, the clearinghouse said.
“Overall, the total number of people paid via BankservAfrica is very close to reaching the 2019 levels, after already having exceeded the 2020 numbers,” said Mike Schüssler, chief economist at economists.co.za.
The BankservAfrica Private Pensions Index (BPPI) showed the average real private pension fell for the second time in 20 months.
“The real average private pension was R9,475, which represented a 0.1% year-on-year decline,” said Naidoo.
The total take-home pay and private pensions processed in value terms declined by 1.3% in real terms but increased by 4.5% in nominal terms. “Based on these numbers, and with salaries coming under greater pressure from the higher inflation rate, one can expect overall retail sales to show a declining or slowing trend in the next month or two,” said Schüssler.