SOLDIERS on Denel-manufactured Rooikat armoured reconnaissance vehicles. The state-owned arms manufacturer this week struggled to pay its staff, but Public Enterprises Minister Pravin Gordhan announced that Denel had in fact received a loan to pay its staff their full salaries this month. Kim Ludbrook EPA-EFE
JOHANNESBURG - The poor state of South Africa's economy meant that both private and state-owned companies were unlikely to pay big salary increases.

This according to Mike Schüssler, the chief economist at Economistscoza, commenting on the BankservAfrica Take-home Pay and Private Pensions Index for May released yesterday.

The index showed real take-home pay increased by 2.6 percent for the year to May, the increase was the first in four months after taking inflation into account.

The real month take-home pay averaged R13 990 in May compared to R13 741 in April, while in nominal terms the increase was 7.2 percent on a year ago.

He said if you worked in a sector that was doing well, you might get about a 5percent increase, but if you got a sector not doing well, 3percent.

“That is where many small firms are and we are seeing a lot of that,” he said.

However, he said that the recent election was likely to have a positive impact on South African workers' salaries for June.

There were delayed salary increases in May as some of these were for government employees and did not reflect in bank accounts in April, while the national elections in early May meant that many civil servants worked more hours last month and that some officials, such as police officers guarding polling stations, worked a little extra in the run-up and during the counting periods of the election. He estimated that this equated to more than 100000 people.

State-owned arms manufacturer Denel this week struggled to pay its staff their full salaries.

However, Public Enterprises Minister Pravin Gordhan announced that Denel had in fact received a loan to pay its staff their full salaries this month, giving the company a short-term reprieve from a cash crisis.

“As we move ahead with the state-owned enterprises, of which we have about 700, many of them are in trouble and will not be able to afford to pay increases, which will have an impact later in the year.

"I have no doubt about that. I think bigger firms will start having problems soon.

"We know that SAA, for example, has about 10 000 to 11 000 people. That's more than double the number of people at Denel.

“If SAA and Denel combined have a problem, we will start picking it up in the numbers. Eskom will run out of money by the end of October, unless the Special Appropriation Bill is passed,” said Schüssler.

Salary increases were also delayed last year for the government, and this means that in the coming months there would be a base effect impact that is likely to show some decline in real take-home pay, he said.