August take-home pay: Not what it seems at first
The data showed that average real take-home pay in August was R14385, a 0.2 percent decline.
“The decline in the BTPI is due to the late and back-dated increases of public servants’ wages last year. As the civil service makes up around 30 percent of the BTPI, late salary adjustments and the subsequent back dated increases influence the data somewhat,” said Mike Schüssler, the chief economist at economistscoza.
Therefore, if civil servant salaries had been paid on time last year, the BTPI increases would have been slightly lower in April to June, while the July and August changes would have been somewhat higher, he said.
“The slight decline is, therefore, overstated. We expect take-home pay to increase ever so slightly in the next few months,” said Schüssler.
The overall salary movement reflected massive increases, followed by substantial declines caused by delayed salary increases by the government. Extended salary negotiations by sectors such as mining or electricity have also contributed to these movements.
However, total take-home pay paid to employees still played a significant role in the economy, as evident in the relationship between new passenger car sales and BankservAfrica’s aggregate data for total salaries paid, he said.
“When salary hikes are low, cars sales are also low, although with about a one-month lead. It already seems likely that car new car sales will remain subdued as take-home wages are unlikely to have above-average increases,” said Schüssler.
Meanwhile, the BankservAfrica Private Pension Index showed the average amount of private pension had increased for a record-breaking 30 consecutive months.
It said real private pensions averaged R7 282 in August, an increase of 5.6 percent, from R7114 in July.
“The long period of increases is an incredible feat in the context of a lacklustre equity market performance. However, with interest rates still relatively positive, one is hopeful that pensioners are not using up their savings too quickly,” said Schüssler.
Data from the Financial Sector Conduct Authority showed that the withdrawal of pension fund benefits was now more extensive than the contributions made, and continues to grow substantially. This may be attributed to current events in South Africa, BankservAfrica said.