Continuing economic woes, higher inflation and low business confidence levels have led to another monthly decline in salaries in May 2023.
This is according to the latest BankservAfrica Take-home Pay index (BTPI).
“The average nominal take-home pay slipped marginally in May to R14,457, remaining 2.7% below the level recorded a year ago,” said Shergeran Naidoo, BankservAfrica’s head of stakeholder engagements.
Amid the dismal economic environment, evidence of resilience has been coming to the fore with better-than-expected economic data releases from the mining and manufacturing sectors.
Both surprised to the upside despite the heavy load-shedding in April, suggesting these industries have become more resilient.
However, confidence levels in the economy remain at shockingly low levels, hampering the possibility of an economic recovery. The RMB/BER Business Confidence Index (BCI) declined for a fifth consecutive quarter to reach the lowest confidence level since 2020.
Similarly, the Absa/BER Quarterly Manufacturing Survey shows manufacturing business confidence remained unchanged, suggesting more than 80% of respondents are unsatisfied with business conditions.
“An environment of such low confidence is not conducive for job creation or comfortable wage increases, as confirmed by the BTPI in May,” says Elize Kruger, an independent economist.
With inflation remaining at elevated levels, the purchasing power of the average salaried worker has flattened. Real take-home pay fell to R13,416 per month in May 2023, or 8.8% lower on a year-on-year basis and the lowest level on record.
While the consumer price inflation cycle most likely reached an upper turning point at 7.8% year-on-year in July 2022, the downward trend has been disappointingly slow.
However, April’s headline inflation figure surprised at 6.8% year-on-year, and the next few months should see more moderation at a faster pace.
The job market remains uninspiring, with BankservAfrica’s data – adjusted for weekly payments – suggesting that an uptick in the number of salaries paid into South Africans’ bank accounts in February and March largely reversed in April and May, leaving the job market essentially flat.
“With little indication of a different economic environment, but rather even lower economic growth forecasted for 2023 compared to 2022, the job market and salary adjustments are likely to remain lacklustre for the remainder of the year, a scenario that could only exacerbate the unemployment crisis,” ends Kruger.