In May 2020 the impact of the pandemic and lockdown on the country’s economy was clear in BankservAfrica’s Take-home Pay Index (BTPI).
A year later it shows a complete reversal, with a continuing recovery and take home pay and employment numbers recovering swiftly and substantially.
The good news
The index shows that real salary increases are slowing as lower paid workers make their way back into the job market. This is illustrated by the total number of estimated monthly payments in May 2021, which have recovered by 13.1% since the May 2020 lockdown economic collapse.
South Africa’s average take home pay increased at a rate similar to inflation in May 2021, despite inflation being around 5% on a year-on-year basis. BankservAfrica’s data for the total aggregate take home pay in real terms indicated that the total wages paid into employee accounts were 3.7% higher than in May 2020.
However, on this basis, May 2021 had fewer wages paid into bank accounts than in the same period in 2019 and 2018.
“On every level, the May 2021 numbers for employment and aggregate wages paid to employees, as well as average and median take home pay, were an improvement on May 2020. At the same time, the figures – other than average and median take-home pay – were well below the May 2019 numbers,” economist Mike Schüssler says.
He expects the latest salary numbers to reflect well in year-on-year retail sales and other consumer spending in May 2021, but it seems the quarterly aggregate salary and pension payments will flatten in the last few months.
May was the seventh month of the BankservAfrica Private Pension Index (BPPI) showing increases at twice the rate of inflation, Schüssler says, but points out that these increases were not only due to lower inflation numbers, as inflation has started to rise. It suggests that state pensioners may have had pension fund increases.
Small pension amount withdrawals have also resulted in the system reflecting fewer pensioners, possibly leading to the consolidation of pension accounts. Nonetheless, average pensions still increased by 11.5% in nominal terms in May 2021.
The bad news
The bad news is that the number of salaries paid fell by 11.7% from May 2020 to May 2019.
“Although job retention is in a healthier state, the overall recovery is not yet complete. When comparing the number of estimated monthly payments, the number of payments is still below the numbers for May 2019 and May 2018,” Schüssler says.
The median salary decreased by 1.5% from May 2020 as the number of weekly paid employees reappeared on the payrolls. The tax holiday also had an impact on the median take home pay more than on the average.
“The BankservAfrica numbers in general make it clear that previous record levels have not yet been achieved despite the recovery reaching later stages.
“While the current lockdown level 3 and the Covid-19 third wave may still impair employment and salaries, the majority of the recovery has taken place, although some sectors such as travel may take another year or two to recover,” Schüssler says.