Take home pay in South Africa saw a jump in May, thanks largely to the late salary increases for government employees, and work done over the 2019 national elections.
The latest BankservAfrica Take Home Pay Index tracked real average pay after taxes in South Africa at R13,990 – up 2.6% from April where it was at R13,741.
The average formal sector employee’s salary was R15,344 before taking inflation into account.
The year-to-date percentage increase was the first in four months after taking inflation into account. In nominal terms, the increase was 7.2% on a year ago.
“There were delayed salary increases in May as some of these were for government employees and did not reflect in bank accounts in April,” said Mike Schüssler, chief economist at Economists.co.za.
“In addition, the National Elections on May 8, 2019, meant that many civil servants worked more hours in May and some officials, such as police officers guarding polling stations worked a little extra in the run-up and during the counting periods of the election.”
It is also likely that the Presidential Inauguration resulted in extra payments to the employees involved, he said, but, as this was in late May, these will only reflect in the June data.
Salary increases were also delayed last year for government, and this means that the coming months will see a base effect impact that is likely to show some decline in real take-home pay, Schüssler said.
“Nonetheless, we believe that June and possibly July will still show real increases in take-home pay, albeit smaller,” he said.
The economist said that it is becoming apparent in the BankservAfrica data – and also other administrative data sets – that government salaries are the primary driver of take-home pay increases.
This is as most of the private sector cannot afford increments that are more than 1% higher than inflation in the weak economic conditions.
“Many sectors can no longer even afford inflation rate increases as economic margins are under pressure in the economy,” Schüssler said.
However, May 2019 remains a very positive month, and the take-home pay increase will likely boost retail and other consumer spending.
Data published by Stats SA on Tuesday (25 June) showed that the average monthly pay (before tax) in the last quarter dropped 1.9% to R20,855 per month.