South African salaries have effectively shrunk over the last five years, new data from debt counsellor DebtBusters shows.
While nominal incomes were 3% higher compared to 2016 levels, when cumulative inflation growth of 24% is factored in for the same period, real incomes shrank by 21% over the five-year period.
This has led to South Africans having less disposable income and increasingly relying on debt to make ends meet, the group said.
“Unsecured debt for the average client is 32% higher than 2016 levels; for top earners, the figure is 49%. This indicates consumers continue to use unsecured credit to supplement their incomes.”
The unrest that swept through KwaZulu-Natal and parts of Gauteng during the second week of July was ignited by the incarceration of ex-president Jacob Zuma on 7 July, professional services firm PwC said in a report this week.
“However, many political analysts agree that it quickly transformed into a different sociopolitical event: much of the unrest was not driven by direct political issues but instead stoked by the country’s long-term challenges of poverty, inequality and unemployment,” the group said.
The Bureau for Economic Research (BER) ascribed the unrest to unmet expectations amongst South Africans about their financial wellbeing.
Based on data collected for its Consumer Confidence Index (CCI), the BER said that since the global financial crisis, South Africans expected improvements in their personal finances that did not match their (weaker) expectations for overall economic prospects.
The CCI data shows that, during the first half of 2021, lower- and middle-income earners were expecting meaningful improvements in their financial situation.
“Essentially, South Africans were expecting the economy to improve on the country’s unemployment challenges. It did not.”
Adding to the strain is the rising cost of food and other essentials, which has continued to eat into the earnings of South Africans.
South Africa’s average food basket cost 7% more in June 2021 compared to the same period last year, PwC said.
Based on data published by Statistics South Africa, the calculations show that the cost of cooking oils (e.g. sunflower and canola) increased by 16.1% in the first half of the year following last year’s poor harvest of oil-producing crops.
Frozen chicken portions cost 8.7% more by June, while prices for vegetables like beetroot, carrots, cucumbers and spinach all increased by more than 10% in 2021 so far due to various factors.
However, the biggest offender is mutton/lamb, which has increased by 36.8% in the six months to June.
Other major offenders include Spinach (+20%), margarine spread (17.6%) and eggs (17.5%).