Real-take home pay for June experienced its largest decline since early 2017 owing to rising inflation and the delay of annual salary adjustments and back-pay in the public sector – the leading employer in South Africa.
This is according to the latest BankservAfrica Take-home Pay Index which measures wages that are transferred to employee bank accounts.
BankservAfrica said that this drop is likely to have an impact on the economy with consumer spending expected to take a knock.
“In current terms, salaries increased by 2% on a year-on-year basis but the inflationary increase of 4.6% over the same period saw real take-home pay actually decrease by 2.4%. This is the largest since January 2017,” said Shergeran Naidoo, head of Stakeholder Engagements at BankservAfrica.
“This means that consumers will not have as much money to spend as they had in the year prior. And this will have a knock-on effect as the costs of the VAT increase and rising fuel prices bite into their budgets,” he said
Naidoo added that the average take-home pay for the formal South African employed adult paid via the national payment system of South Africa was R14,302 in June in real terms and R13,593 in nominal terms.
“The real-take home pay collapse in June is due to the three month delay in annual salary adjustments of the public sector,” said Mike Schüssler, chief economist at Economistscoza.
Schüssler explained that the public sector wage increases backdated to April were only paid in July, impacting the level of real take-home pay. The public sector makes up about 30% of the BankservAfrica Take-home Pay Index.
“Therefore, it is likely that consumer spending will fare better in July when government, being the largest employer in South Africa, makes these back payments,” said Schüssler.