South Africa’s take-home pay numbers appear to be returning to normal levels, says BankservAfrica, recording a slight increase in its Take-home Pay Index (BTPI) for September 2020.
The slight increases reported over the past months marks a change from recent months, however the automated clearing house warned that the next few months are likely to reflect the ‘new normal’ for salaries.
The date revealed a slight increase of 2.1% in the month of September, with nominal average take-home pay at R14,008. In real terms, taking inflation into account, take-home pay was recorded at R12,029 in September, down 1.4% from a year ago.
Despite the small year-on-year decrease, BankservAfrica’s Shergeran Naidoo said that this shows that salaries are moving in the right direction “and that, more importantly, the worst is hopefully behind us”.
Chief economist at Economists.co.za, Mike Schüssler said that the data reflects South Africa’s take-home pay ‘normalising’, as fewer Covid-19 UIF TERS payments were made and the number of people paid were at levels closer to those typically displayed in the monthly index.
“There are, however, still several TERS as well as late TERS payments in the system – but these are far fewer than before,” he said.
The total cumulative salaries paid increased by 2.1% according to the BTPI data. However, Schüssler said that some relief payments in the system, the redirection of pension funds to supplement incomes, as well as UIF and TERS payments, may have contributed to this increase.
While the BTPI has a similar overall picture to South Africa’s official retail figures, it also reflects the SARS Personal Income Tax (PIT) data with an approximate two-month lead.
The PIT data for August 2020, which would be the July 2020 salary tax collection data, showed a steep decline of over 22%. This is similar in trend to BankservAfrica’s total salary payments for July 2020, which declined by 35%.
“Both sets of data reflect the worst declines on record – and there are differences,” Schüssler said.
“For the BTPI, this can be explained by the job losses and the temporarily laid off lower paid income earners such as hotel, tourism and restaurant staff. The job devastation experienced by casual workers in industries ranging from construction to personal transport services also contributed to this,” he said.
“One, however, cannot be certain that the numbers will return to what they were before the Covid-19 lockdown for the BankservAfrica Take-home Pay Index. But early indications suggest the labour market appears to be moving in the right direction.”
Schüssler said that it seems as if consumer spending will continue to climb slowly, based on the recovery trend that the cumulative take-home pay numbers in the BTPI numbers show.
“But with consumer confidence being obliterated by the lockdown, it will be interesting to watch the movements in the months to come and as we approach the major annual shopper’s days of Black Friday, Cyber Monday and the festive season,” he said.