Salaries paid out in May show a significant 7.2% drop
CAPE TOWN - Salaries paid out in May fell significantly by 7.2 percent, reflecting the downturn in the number of people employed as well as financial pressure among low income earners from the Covid-19 lockdown.
The latest BankservAfrica payments clearing house data monitored over 4 million take-home pay transactions in May, which represents 2.75 million employees in the formal sector.
The amount paid to employees on the BankservAfrica system declined by -7.2 percent in real terms, reflecting the impact of the Covid-19 crisis - even with the UIF Temporary Employee Relief Scheme (TERS) pay-outs, tax reductions and pension payment holidays, said BankservAfrica head of stakeholder engagements Shergeran Naidoo.
"The lockdown has hurt people who take home less than R10 000 a month. We estimate the number of payments for casual employees has been cut 26 percent, and weekly payments have declined by 9 percent, while monthly payment numbers fell by 2 percent," said economists.co.za chief economist Mike Schüssler.
"Counting employee payments made via BankservAfrica’s payments system, we estimate that about 13 perecent of employee payments have disappeared," said Schüssler.
This did not, however, translate into the exact number of additional unemployed people in May, as some payments had gone from weekly to monthly, as would be the case when a weekly wage earner gets paid UIF.
"Also, payments on the BankservAfrica Take-home Pay Index were more likely to represent that of bigger enterprises and government," said Schüssler.
"We can presume about 20 percent of private sector salary payments did not take place last month, which is concerning as it indicates a massive spike in unemployment," he said.
"Our take-home pay data tell us that at least one in five private sector jobs are currently at risk. South Africa could see between 1 million and 3 million jobs lost with about 1.8 million as the most likely number," said Schüssler.
Employment is a lagging indicator and it can take over a year to reflect the full extent. Many services are still not open and others are not seeing the same turnover as before. Exports have dropped. There have been early signs of “normalisation” that could turn the tide.
"But for now, the road will be difficult," he said.
The BankservAfrica Take-home Pay Index for May showed the total value paid to employees decreased by 3.8 percent in nominal terms and 7.2 percent in real terms.
Naidoo said on average, the number of employees taking home more than R40 000 a month over the last three months, increased by 8.1 percent, compared with the same time last year. The number of payments made to employees earning less than R10 000 per month fell by 13.4 percent over the same period.
BUSINESS REPORT ONLINE