BankservAfrica has published its findings from the first take-home pay index in 2019, providing a review of disposable income in 2018, and where things stand at the start of the new year.
In December, the average banked real-take home pay was R14,094 showing – a 0.5% year-on-year change and a slight improvement from November, according to Shergeran Naidoo, head: stakeholder engagements at BankservAfrica.
The nominal value was R15,045 or a 5.5% change on December 2017.
BankservAfrica’s Take-home pay Index tracks about 3 million salary earners every month via about 4 million payments a month paid into the national payments system.
The Take-home pay Index had a mixed year as many pay negotiations resulted in delayed increases, which in turn resulted in an actual decline in real take-home pay. When the increases were finally paid, some back pay take-home pay shot up and was strongly positive for a few months. This was evident in August when public sector back payments took place.
However, towards the year-end, it seems that take-home pay declined somewhat as inflation shot up – partly due to massive fuel price increases.
Salary increases barely account for inflation
According to Mike Schüssler, chief economist at Economists.co.za, the dust settled in December when the actual take-home pay improved marginally. Still, at the current rate, it would take 180 years to double a salary in real terms.
“The index had an up and down year as at first, and many pay negotiations resulted in delayed increases, which led to an actual decline in real take-home pay,” Schüssler said.
“When the increases were finally paid, some back pay take-home pay shot up and was strongly positive for a few months. This was evident in August when public sector back payments took place.”
Take-home salaries (after taxes, pensions and in some cases medical expenses) did, however, beat inflation, marginally.
The nominal salary increases of 5% was double the shopping inflation rate as retailers kept price increases low. However, higher costs for fuel, medical and utility bills pushed up the average inflation rate to 4.6%.
The average real take-home pay for the whole of 2018 was R13,990 per month for the person receiving their salary via a bank account (before inflation, the average was R15,018 per month).
“The weak economy is not helping South Africans get salary increases, although the average increase for the year is just above inflation,” said Schüssler.
“Some salary increases were above 7%, which, after tax and inflation, would have resulted in an estimated 1.8% increase in real after-inflation terms. Many private sector firms, however, remain under pressure resulting in less than inflation increases. Many employees are struggling to maintain their standard of living,” he said.
A total increase of 1% after tax and pension in take-home pay over five years says that, in essence, salaries were adjusted just for inflation on average, Schüssler said.