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File Image: IOL

Is SA’s take-home pay back on track?

By Opinion Time of article published Oct 29, 2020

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South Africa’s take-home pay numbers appear to be returning to their normal levels, recording a slight increase as seen in the latest data from the BankservAfrica Take-home Pay Index (BTPI) for September 2020. The slight increases experienced over the past months mark a change from the precarious circumstances seen in the months before. The next few months, however, are likely to reflect the ‘new normal’ for salaries in South Africa.

“The nominal average take-home pay in September was R14 008, representing a very small increase of 0.2% from August 2020,” says Shergeran Naidoo, Head of Stakeholder Engagements: BankservAfrica. “Still, this shows us that salaries are moving in the right direction and that, more importantly, the worst is hopefully behind us.”

“South Africa’s take-home pay ‘normalised’ in September as fewer Covid-19 UIF TERS payments were made and the number of people paid were at levels closer to those typically displayed in the monthly BankservAfrica Take-home Pay Index (BTPI),” says Mike Schüssler, Chief Economist at economists.co.za. There are, however, still several TERS as well as late TERS payments in the system – but these are far fewer than before.

“The total cumulative salaries paid increased by 2.1% according to our BTPI data. However, one must remember that some relief payments in the system, the redirection of pension funds to supplement incomes, as well as UIF and TERS payments, may have contributed to this increase,” says Schüssler.

The BTPI provides a view on average salaries and total wages paid into the bank accounts of South Africa’s formal sector employees via the National Payment System for processing by BankservAfrica. This useful time series reflects spending trends a few weeks before the official data is released.

While the BTPI has a similar overall picture to South Africa’s official retail figures, it also reflects the SARS Personal Income Tax (PIT) data with an approximate two-month lead. The PIT data for August 2020, which would be the July 2020 salary tax collection data, showed a very deep decline of over 22%. This is similar in trend to BankservAfrica’s total salary payments for July 2020, which declined by 35%.

Both sets of data reflect the worst declines on record – and there are differences. “For the BTPI, this can be explained by the job losses and the temporarily laid off lower paid income earners such as hotel, tourism and restaurant staff. The job devastation experienced by casual workers in industries ranging from construction to personal transport services also contributed to this,” explains Schüssler.

One, however, cannot be certain that the numbers will return to what they were before the Covid-19 lockdown for the BankservAfrica Take-home Pay Index. But early indications suggest the labour market appears to be moving in the right direction.

“It seems consumer spending will continue climbing slowly, based on the recovery trend that the cumulative take-home pay numbers in the BTPI numbers show. But with consumer confidence being obliterated by the lockdown, it will be interesting to watch the movements in the months to come and as we approach the major annual shopper’s days of Black Friday, Cyber Monday and the festive season,” says Schüssler.

It is also likely that we will have a view of the ‘new normal’ in the next few months for salary numbers and income changes owing to pension funds being redirected to salaries or salary adjustments of some kind,” says Schüssler.

“Then there is also the possibility of a second wave of Covid-19 in South Africa and the consequences that this may bring for businesses and individuals alike. If this happens, there will be major repercussions for the economy and salaries,” ends Naidoo.

PERSONAL FINANCE

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