South Africans are getting poorer as their salaries have not increased in line with inflation over the past two years.
This was revealed in a research note attached to the South African Reserve Bank’s (SARB) Quarterly Bulletin, which analysed economic data for the second quarter of 2023.
The research note focused on the current trends in South Africa’s labour market, particularly wage growth and worker productivity.
In South Africa, real wage growth contracted in 2022 and 2023 as nominal wage growth moderated to below inflation due to a challenging domestic economic environment amid intensified load-shedding.
The increase in load-shedding and deteriorating logistical services compounded rapidly rising global inflation from disrupted supply chains and higher commodity prices.
Real wage growth is a proxy for workers’ living standards, and a sustained increase in real wages will raise their standard of living.
However, wages also represent the cost of labour in the production process and thus impact the prices of goods and services.
South Africa’s headline inflation rapidly rose in 2021 to a peak of 7.8% in July 2022 – the fastest increase since 2009.
By contrast, private and public sector wage growth in terms of employee gross earnings and compensation measures moderated throughout 2022.
The moderation in public sector remuneration growth primarily reflected successive delays in implementing the annual public sector wage.
More recently, growth in formal salaries accelerated for two consecutive quarters, from 2.0% in the third quarter of 2022 to 5.4% in the first quarter of 2023.
However, workers’ demand for higher wages has continued through 2022 and has increased in 2023.
In 2022, workers in collective bargaining agreements asked for an average wage increase of 6%, which has now increased to an average demand of 6.4% in the first two quarters of 2023.
Companies have proven unwilling to increase employees’ wages at these levels, resulting in a sharp rise in protest action from workers.
For the first two quarters of 2023, the South African economy has lost nine million workdays from protest action, with no sign of slowing down.