Big jump in pay in South Africa in 2016
New data published in the BankservAfrica Disposable Salary Index (BDSI) shows that South Africans working in the formal sector took home far more money in February, than they did a year ago.
According to the data seen passing through the BankservAfrica payment system last month, the average take-home pay in the formal sector increased by 8.7% compared to the same month in 2015.
“This means that, despite the inflationary increase, take-home pay also rose by about 2.3% above the inflation rate to an average of R13,511 in January 2016,” said Dr Caroline Belrose, Head of Knowledge and Risk Services at BankservAfrica.
Banked pensions on average increased by 6.9% on a year ago to R6,131. “The increase in pensions in the last two months has been at the same rate, but both are the slowest nominal increases since July 2014. Pension increases were still higher than inflation, but only by about 0.6%,” said Belrose.
However, the ability for salaries to stay ahead of inflation is expected to come under pressure as higher taxes and ‘bracket creep’ are likely to have a negative impact on take-home pay increases.
“By definition, ‘typical take-home pay’ or ‘typical bankable salary’ refers to the money that the person in the middle of a large group gets paid into a bank account.”
“Instead of relying on the average for that group, this typical amount is often a better reflection of the changes in income, as the average may be pushed up due to a small percentage of highly paid earners getting large increases,” said Mike Schüssler, Chief Economist at Economists dotcoza.
“For four months in a row the typical salaries and pensions have increased at a higher rate than the average,” he said.
Over the last two years – apart from a couple of anomalous months – the typical pension has outpaced the average pension by an average of 1.9%. The typical bankable pension has increased to R4,335 per month which is nearly R855 more than in January 2014.
The typical salary reached R9,894 per month – although it is important to note that this number may be slightly disproportionately high due to sales commissions that get paid in January after the December retail boom, BankservAfrica said.
Although pensioners in this dataset still only get about 44% of the average take-home salary, the typical pension has increased at a faster rate than the take-home salary for the past 11 months.
“It will also be interesting to see the role that the stock market has on pension pay-outs as we continue into 2016 with a weak equity market. The data suggests that that pensions change on past market performance so weak markets may still have a delayed impact on pensions,” Schüssler said.
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