Johannesburg - While disposable salaries rose for the third month in a row in September, the negative “bigger picture” in the economy, which features high unemployment, reduced growth in government salaries, sluggish economic expansion and high inflation, serves to erode household spending over the long term.
Responding to the latest BankservAfrica Disposable Salary index, which showed that disposable salaries are on the rise as the motor sector strike had less of an impact on the economy than the platinum industry strikes last year, Nedbank economist Busisiwe Radebe said there were still tough times ahead.
“It is promising to see that disposable income is increasing, but there are these limiting factors. You must look at the bigger story and not only this one figure.
“If you look at what’s happening in the bigger economy I don’t think household consumption expenditure will increase by too much,” Radebe said.
The index, which tracks more than a third of formal employment, found that above-inflation salary increases would start showing in shop tills in the next few months.
“While the economy is growing slowly, consumption is likely to remain fairly robust over the next few months. It is clear that, despite strikes, the total wages paid out in the economy are still rising,” the report said.
The report said this was probably due to factors including growth in salaries, small growth in private pension payments, slightly less unemployment and fewer man days lost due to strikes than a year ago.
Although the pullback in unsecured lending had put a strain on consumers, they would still have “cash in their pockets”.
Retailers are pegged to benefit from consumers spending more in their stores. “These sales may come in slower, but they will be there,” the report said.
The latest retail sales data showed an unexpected lift in September despite higher costs of living. Although the sales surprised on the upside analysts were still not positive on local growth.
Investec group economist Annabel Bishop said in a note that business and consumer confidence were low and were likely to continue to decline as people expected interest rates to increase.
According to BankservAfrica, disposable income climbed 7.6 percent year on year in nominal terms in September, compared with an increase of 1.3 percent a year ago.
The median salary in bank accounts was about R8 000 and about 35 percent of employees took home more than R10 000 in September.
Research by Stellenbosch University showed that the black middle class had increased to almost 4 million in 2012 from 350 000 in 1993.
This represented a share of 41 percent of the country’s middle class.
The report stated that wage inequality rather than unemployment was the cause of the high inequality in South Africa. - Business Report