Rising inflation and the delay of salary adjustments and back-pay in SA’s public sector resulted in the largest decline in take-home pay for June. Photo: Simphiwe Mbokazi/African News Agency (ANA)
CAPE TOWN - Rising  inflation and the delay of annual salary adjustments and back-pay in South Africa’s public sector resulted in the largest decline in real take-home pay for June since early 2017, according to data released by BankservAfrica.

In its monthly South African Take-home Pay and Private Pensions indices for June, BankservAfrica said this was likely to have an impact on the economy with consumer spending expected to take a knock.

Head of stakeholder engagements at BankservAfrica Shergeran Naidoo said in current terms, salaries increased by 2 percent on a year-on-year basis but the inflationary increase of 4.6 percent over the same period saw real take-home pay actually decrease by 2.4 percent , the largest since January 2017. 

“This means that consumers will not have as much money to spend as they had in the year prior. And this will have a knock-on effect as the costs of the VAT increase and rising fuel prices bite into their budgets,” said Naidoo.

Naidoo said the average take-home pay for the formal South African employed adult paid via the national payment system was R14 302 in June in real terms and R13 593 in nominal terms.

Chief economist at Economistscoza Mike Schüssler cited the three-month delay in annual salary adjustments of the public sector as the reason for the real take-home pay collapse in June.  

He said the public sector wage increases backdated to April were only paid in July, impacting the level of real take-home pay. The public sector makes up about 30 percent of the BankservAfrica Take-home Pay Index.

“Therefore, it is likely that consumer spending will fare better in July when the government, being the largest employer in South Africa, makes these back payments,” said Schüssler.

Schüssler said one of the most interesting trends in the last five years was private pension increases, which rose above the rate of inflation. “This is at a time where equity prices have not increased after taking inflation into account, indicating pension assets have been invested more in yield-producing investments or that pension drawdowns are increasing. 

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“Pension data is positive on every measurable way and indicates pensioners are able to play a more important role in the economy. This is evident in the continuing rise in consumer spending such as retail,” he said.

The BankservAfrica private pension index for June showed the real average pension paid into bank accounts rose to R7 008. Naidoo said this was the first time that real private pensions increased above R7 000 a month. “The increase of real pensions currently stands at 5.5 percent .” 

In real terms, the average pension for June rose to R7 668 and the boost in nominal terms was 10.2 percent . Naidoo said total banked private pensions in the BankservAfrica data increased from 9.6 percent of total take-home pay banked to 11.4 percent . This as pensioners are fewer in numbers than those in the workforce and receive only about half of the income of employed people.