SA's take-home pay for October increases
JOHANNESBURG - South Africa’s take-home pay for October increased the most in two years and reached new highs in value, according to the latest BankservAfrica Take-home Pay Index (BTPI).
“Take-home pay reflected a high nominal increase of 7.2 percent on a year-on-year basis and reached R16 173. This is the first-time average take-home pay reached the R16 000 level,” said Shergeran Naidoo, the head of stakeholder engagements at BankservAfrica.
“In real terms, the BTPI increased by 3 percent year-on-year owing to slightly fewer actual payments, particularly in the lower end of monthly take-home pay. The average real-time payment was R14 300, the third-highest level recorded by BankservAfrica.”
Mike Schüssler, the chief economist at economists.co.za, said: “The above-average rises in take-home pay in October were on the back of consumer price inflation (CPI) dropping to its lowest levels in eight years.
“One must remember that many salary adjustments are linked to the CPI. Therefore, lower inflation will probably lead to lower nominal increases over the next year. However, the latest data shows inflation is expected to rise again. Backdated wage increases for civil servants and year-end bonuses were the other reasons for the higher than usual real salary increases.”
The October take-home pay increase is likely to be a boost for retail sales in November.
“If the real take-home pay increases at the end of November are anywhere near October’s levels, Black Friday sales will spike significantly,” said Schüssler.
The BankservAfrica Take-home Pay Index indicates October and November consumer spending will be as good as the increases seen last year – if not even better.
Meanwhile, privately banked pensions increased by 4.2 percent in real terms in October and represented the 32nd consecutive month of year-on-year increases, says Naidoo.
Most of these have been far higher than salaries.
In both September and October, the number of pensioners declined. However, the average pension after inflation is still above 3 percent on a year-on-year basis.
“In real terms, the average pension paid via BankservAfrica reached R7 310 in October,” said Naidoo.
The total payments increased by 2.2 percent above the rate of inflation for both pensions and salaries. This means consumer spending should recover in October.
“Already other positive signs, such as the increase in tax collections from personal income tax, leaves one optimistic about consumer spending in the last quarter,” says Schüssler.
However, he says household consumption expenditure will remain under pressure in the long run unless earnings continue rising.
BUSINESS REPORT ONLINE