Stats SA this week reported that the average monthly salary for South Africans has declined, while other data shows that the average take-home pay has dropped dramatically.
According to Stats SA, average monthly earnings paid to employees in the formal non-agricultural sector decreased from R20,060 in November 2017 to R19,858 in February 2018 – though this was up 5% year on year from R18,913 in February 2017.
Expressed as an annual salary, this equates to R238,300 a year.
A separate release from BankservAfrica showed that the average take-home salary was significantly lower at R13,621 a month – or R163,450 a year.
It must be noted that South Africa’s average salary data is skewed by large levels of inequality, and excludes the large informal sector. South Africa also has high levels of unemployment, which is not factored into the bigger picture here.
How SA compares versus the rest of the world
Sticking with how South Africa’s formal sector is remunerated compared to the world, we can look at the OECD, which publishes data on average annual salaries across the partner regions.
While South Africa is not included in the data set, we are able to use conversion data from IMF to see how our average salaries would fit in.
The OECD uses gross salary numbers as at the end of 2017, so the data from Stats SA for February 2018 is the closest comparison we have. The OECD figures are also reported in ‘international dollars’, which takes purchasing power parity into account.
South Africa’s average salary per year translates to $17,105 in dollar terms, but the country has a local purchasing power almost twice the value of the US$ – a fair value exchange of R6.25 to the dollar, according to the IMF (2018).
That means that the R238,300 average annual salary in South Africa is equal to $38,128 in PPP dollar terms.
This puts South Africa’s average salary around the same levels as European nations like Italy and Spain.
The graphic below outlines the highest-paying countries in the world, and where South Africa fits in.