The reality of disposable income in South Africa – we’re getting poorer

While the salary figures on pay slips may have increased over the past two years – in real terms, the average South African is poorer than they were at the start of 2015.

Financial institution Bankserv recently released its Disposable Salary Index (BDSI), detailing how much disposable income South Africans are left with each month.

The data is based on BankservAfrica transaction data and represents around three million people out of a formal workforce of 8.3 million using the Quarterly Employment Survey (QES) from Statistics South Africa as a guide.

“Real salary adjustments in December reflected the longest – and fastest – decline since the BankservAfrica BDSI data started in 2011,” said Dr Caroline Belrose, head of Information Services at BankservAfrica.

On a year-on-year level, disposable salaries in December 2016 were lower than December 2015 and 2014.

In January 2015, the average nominal disposable income was R12,808 – R11,506 in real terms. Fast forward to December 2016, where Bankserv’s data shows nominal salaries had increased to R14,102 per month, but in real terms actually decreased to R11,309.

Belrose said that the 1.5% decline is likely to impact consumers with income pressures resulting in reduced spend on major purchases such as cars, houses and furniture.

“There is no doubt that most consumers were under pressure for most of 2016 and parts of 2015. The December BDSI suggests that this will continue in Q1 2017 as overall consumer expenditure is expected to remain subdued with lower than inflation salary increases likely to continue in the next few months,” said Mike Schüssler, chief economist at Economists dotcoza.

However, as 2017 increases will be based on higher inflation in 2016, the real declines should stabilise as soon as the annual salary increases are implemented around the March to April period, the economist said.

This is how nominal vs real salaries have changed since January 2015:

According to a Stats SA report released in 2016, the average monthly salary at the end of 2015 was R17,517 per month, including bonuses and overtime.

 Read: How much you should be earning in your 40s in 2017