Despite tough economic conditions, the average nominal take-home pay in South Africa showed a marginal uptick in June, adding to the stabilisation seen over the past three months.
This is according to the BankservAfrica Take-home Pay Index (BTPI), which was released today.
“The average nominal take-home pay for June was R14,596 – exceeding the R14,579 level shown in June 2022 and fairly higher than the R14,483 in May 2023,” said BankservAfrica’s head of stakeholder engagements Shergeran Naidoo.
He said the stabilisation in salaries noted since April 2023 is welcomed against the backdrop of economic activity dampened by ongoing load-shedding, rising interest rates, a lacklustre job market and low confidence levels.
“Indications that some industries have become progressively more resilient to the effects of load-shedding is an underlying positive development in an otherwise dismal environment,” said independent economist Elize Kruger.
Furthermore, the South African Reserve Bank and other forecasters have recently upwardly revised their real GDP growth forecast for South Africa in 2023 in response to the observed resilience.
On a year-on-year basis, the average real take-home pay remains in negative territory in June but less so than the previous two months.
According to the BTPI, the average take-home pay increased to R13,522 in June. This is 0.8% higher than in May 2023 but still 5.7% lower than the R14,336 recorded in June 2022.
“Salary earners have had to deal with a double whammy during the past year of disappointing average nominal wage increases and high consumer inflation,” said Kruger.
The erosion of households’ purchasing power can also be seen in declining retail sales. StatsSA recently indicated that real retail sales for the first five months of 2023 are 1.2% below the corresponding period in 2022.
However, salary earners could see some relief soon based on the notable moderation in consumer inflation from 7.1% year-on-year in March to 5.4% year-on-year in June.
“The moderation in consumer inflation will go some way in reducing the extent of the erosion of purchasing power that households have had to deal with, especially in the past year,” said Kruger.
Current forecasts suggest headline inflation could be at 5.0% year-on-year in July and average around 5.2% in H2 2023, which could bring more good news.
The job market, however, remains uninspiring, as indicated in BankservAfrica’s data adjusted for weekly payments.
With fewer salaries paid into South Africans’ bank accounts in the past three months, cumulative job losses of almost 200,000 were recorded in Q2 2023.
“With little indication that a different economic environment will play out in the second half of 2023, the job market and salary adjustment are likely to remain lacklustre in the remainder of 2023, a scenario that could only exacerbate South Africa’s unemployment crisis,” said Kruger.
The BankservAfrica Private Pensions Index (BPPI) ticked up in both nominal and real terms during June, continuing its outperformance trend.
“The average nominal private pension increased to R10,734 in June compared to the previous month’s R10,285 – 7.2% higher than one year earlier and the highest monthly payment so far in 2023,” said Naidoo.
In real terms, the average real private pension in June 2023 came to R9,825 – 1.7% higher compared to a year earlier.
Kruger believes this signals the purchasing power of pensioners has largely been preserved amid the high inflation environment.