You’re taking home less

File picture: Waldo Swiegers, Bloomberg

File picture: Waldo Swiegers, Bloomberg

Published Sep 28, 2016

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Johannesburg - South Africans are, in general, finding they have less money left at the end of the month as inflationary pressures bite.

Although inflation has dropped down to 5.9 percent from its levels above the SA Reserve Bank’s top end target of 6 percent recently, consumers have been hit with higher interest rates - prime is now at 10.5 percent - and food items continue to cost more. In addition, electricity and water cost more, and the fuel price will increase by 40c a litre next Wednesday.

Amid all these pressures, BankservAfrica’s latest Disposable Salary (BDSI) shows year-on-year disposable salaries declined in August for the third consecutive month and for the fifth time in 2016.

Employees are now taking home 2.5 percent less than a year ago, the transaction handling company says.

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BankservAfrica’s index tracks take-home and pension payouts via the South African payment system on a monthly basis. As the data is near cast, it provides a close up assessment of SA’s economic situation as compared to more long-term indicators.

“In the second quarter of 2016, the final consumption expenditure by households increased by 1 percent year-on-year while total domestic expenditure decreased by 0.5 percent year-on-year,” says Mike Schüssler, chief economist at Economists dotcoza.

“While workers received salary increases in nominal terms, the real value for these ended up being lower due to the higher rate of inflation,” explains Dr Caroline Belrose, head of Knowledge and Risk Services at BankservAfrica.

Inflation averaged 4.6 percent in 2015.

As a result, BankservAfrica says the typical inflation-plus salary increases are effectively not beating this year’s inflation. In addition, above inflation increases on medical insurance and real personal income tax contributed to the growing gap between gross and net salaries.

So far, Discovery has said its premiums will go up by an average of 10 percent.

“Other than early last year, when government – the largest employer in the data – delayed salary adjustments for three months, there are no examples in the recent past of such slow nominal growth in average disposable salaries,” says Schüssler.

The BDSI is at risk of showing a real decline in salaries for the entire year, should the current trend hold. For the first eight months, real take-home salaries declined by 0.4 percent.

Pension payouts, conversely, increased 1.7 percent year-on-year for the first 8 months of the year. This is for the real private pension payments for 650 000 pensioners measured in BankservAfrica’s Private Pension Payments Index (BPPI).

“Pension payments increased by 3.5 percent in real terms and by 9.7 percent in nominal terms”, says Belrose.

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