The latest BankservAfrica Take-home Pay Index (BTPI) indicated positive movements in the job market as the average take-home pay rose again in August.
Further boosting July’s growth, the average take-home pay rose again in August 2023, surpassing the levels reflected last year.
The latest data also reflects some good news for the local job market in Q3.
“The average nominal pay for August reached R15,578, representing a 5.8% increase on the R14,717 recorded in August 2022,” said BankservAfrica’s head of stakeholder engagements Shergeran Naidoo.
The August figure was also higher than July 2023’s R15,525.
After stabilising in Q2, nominal salaries improved in July and August despite the unchanged economic narrative.
This is as some industries have become progressively more resilient to the effects of load-shedding.
Providing a snapshot of operating conditions in the private sector, the S&P Global South Africa Purchasing Managers’ Index registered a reading above the 50.0 neutral mark in August for the first time in six months.
This signals somewhat better conditions in the private sector. If sustained, this could be a supportive factor for employment and remuneration prospects.
Compared to a year ago, the average real take-home pay increased by 0.9%, only the second positive annual growth rate since September 2021.
However, the real take-home pay at R14,284 in August 2023 is marginally lower than July’s R14,346.
“While the somewhat higher levels of real take-home pay in the past two months are heartening, it has partly been driven by a notable moderation in consumer inflation,” said independent economist Elize Kruger.
Headline consumer inflation moderated from 7.1% year-on-year in March to 4.7% year-on-year in July and ticked up marginally to 4.8% in August, reducing the extent of the erosion of purchasing power that households have had to deal with.
While this is back into the South African Reserve Bank’s 3% to 6% target band for three consecutive months, an unwelcome U-turn is on the cards, she said.
With estimates of petrol and diesel price increases at around R1.00/l and R1.50/l in early October, the cumulative increases over the most recent three months would be about R3/l for petrol and a notable R5/l for diesel.
According to Kruger, these increases will no doubt push headline inflation into a range of 5.5% to 5.9% for the next few months.
Still, consumer inflation is forecast to average at 6.0% in 2023 compared to a 13-year high of 6.9% in 2022 (2009: 7.1%) and should then moderate further to average around 5.2% in 2024.
While the interest rate cycle has probably reached its plateau, the South African Reserve Bank is aware of the upside inflation risks posed by the renewed rand depreciation and higher fuel prices, among others.
“This will result in interest rates remaining elevated for some more months, with all other challenges remaining. With household finances already under severe pressure, this scenario remains negative for consumer spending and confidence levels,” said Kruger.
The BankservAfrica data adjusted for weekly payments, suggests a slight improvement in the job market in Q3.
According to the BankservAfrica sample, about 187,500 more salaries were paid in July and August, almost offsetting the Q2 losses of 198,000, but also confirming the sideways trend in the number of salaries paid so far in 2023.
“With the economic realities largely unchanged into the second half of the year, the job market is likely to remain lacklustre in the remainder of 2023,” said Kruger.
The BankservAfrica Private Pensions Index slipped marginally in nominal and real terms during August but remains in positive territory on an annual basis.
“The average nominal private pension moved to R10,741 in August compared to the previous month’s R10,983, but still 6.2% higher than one year earlier,” said Naidoo.
In real terms, the average private pension in August 2023 came to R9,773, 1.3% higher compared to a year earlier, signalling that the purchasing power of pensioners, represented in the BankservAfrica database, has held up despite the high inflation environment.