CAPE TOWN - The number of take-home salaries fell by nearly 35 percent in July compared with the same month a year before, according to the latest BankservAfrica’s Take-Home Pay and Private Pensions index.
BankservAfrica head of stakeholder engagements Shergen Naidoo said the index provided valuable information not only of salary trends, but also of the “curiously high” number of individuals not getting a salary or wage throughout the lockdown period in South Africa.
“We have observed large declines in the number of salary and wage payments that are routed through the National Payments System for processing by BankservAfrica. But the challenge for the index is that there is no clear reason for the fewer payments,” said Naidoo.
In July, the decline in the number of salaries suggested the impact of the Covid-19 lockdown in weakening the economy, and the dire impact this has had on the private sector.
However, the latest June and July economic data, including BankservAfrica’s Economic Transaction Index, pointed to an economy in a gradual recovery.
Economists.co.za chief economist Mike Schüssler said challenges faced by the Covid-19 UIF TERS system payouts contributed to the decrease in the number of salaries.
“It is possible that because of UIF TERS, there was about a 480 000 reduction in salary payments via traditional payroll systems, due to payments being made via different means. It seems 2.9 million people were paid, out of a normal 3.3-3.6 million normal estimated monthly payments, represented in the BankservAfrica Take-home Pay Index, for July 2020,” said Naidoo.
Schüssler said the part UIF and part salary payments that typified the UIF TERS programme, had created disorder for payroll systems, and these payments had to either be rewritten or circumvented to help employees receive the right amount. As many UIF TERS payments were also delayed, this created even more problems.”
He said South Africa’s take-home pay also took a sizable downswing in July, following on from the low June figures, to some extent mirroring the economy.
“All in all, we believe the impact on employment will only be seen in the coming months as the UIF TERS payments come to an end, some interim laid-off workers are re-employed and get their income back, and the economy normalises to a certain degree,” said Schüssler.
BankservAfrica’s monthly measured private pensions increased by 2.7 percent in real terms but the trend of fewer pension payments has continued for the fourth consecutive month.
“The combined private pensions and take-home pay fell by 33 percent, which along with a 9 percent decline in July retail sales reported on Wednesday, suggested the Post Covid-19 economic rebound “may be faltering somewhat".
“A clearer picture of actual take-home pay and pensions will emerge in October and November, when the sizable UIF payments stop and government’s additional Sassa’s relief payments cease,” said Schüssler.
Democratic Alliance MP Dr Michael Cardo said in a statement Employment and Labour Minister Thula Nxesi should commit to a timeline on the resumption of Covid-19 TERS payments by the Unemployment Insurance Fund. The scheme has been suspended after the Auditor General last week uncovered financial irregularities in the scheme.
BUSINESS REPORT