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According to BankservAfrica, the nominal Take-home Pay Index (BTPI) has slipped, indicating that the average nominal South African salary (after deductions) decreased to R14 340 in July, compared to R14 618 in June 2022 and down from the 2022 high of R15 593 reached in February.
The study showed that average salaried workers remain strained in this economic environment, especially given the extent of increases in basics like food items and fuel.
According to local reports, the average rental is around R7,971. And the average cost of the Household Food Basket was R4 775,59 in August.
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This was also reflected in the notable 7.6% y/y drop in the real average salary recorded in the BTPI in July. However, as BankservAfrica forecasted that July’s 7.8% headline CPI print will be in the upper turning point of the current inflation cycle, the pressure should start to alleviate somewhat as inflation moderate towards year-end.
“We forecast that inflation could be around 6.6% by year-end,” the payments partner said in its most recent report, released yesterday.
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“While the BTPI does suggest that consumers’ average earnings are under severe pressure, we have flagged in recent reports that the BankservAfrica data signalled that more people have been receiving salaries compared to a year ago.
“The actual data, as reflected in StatsSA’s latest Labour Force Survey published on 23 August, surprised to the upside, reported a notable 648 000 jobs were created in Q2 (vs Q1’s 370 000), despite the challenging economic environment. The gradual relaxation of Covid-19 restrictions on gatherings, initially from 30 April, and the final removal of all remaining lockdown restrictions, effective from 23 June, clearly provided much-needed support to the local economy and fostered a further recovery in employment opportunities,” the report read.
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After adjusting for weekly workers, the BankservAfrica data suggests that this trend is likely to prevail into Q3, though July’s data indicates that the pace of new job creation is likely to moderate somewhat.
Thus, although the average nominal salary has been moderating in recent months, probably due to the bulk of new job opportunities evident in the lower income categories, earning a salary in South Africa is still a lot better than being part of the unemployment statistics.
While the BTPI and BPPI data are monthly and analysed as such, the focus on rising living costs has accentuated the question of whether salaries in South Africa have kept up with inflation.
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“To answer the question, we have compared the BankservAfrica BTPI data from 2017 to July 2022 to consumer inflation. South Africans’ take-home pay (after tax and other salary deductions) managed to keep up with inflation between 2017 and 2021. However, in the first seven months of 2022, BankservAfrica’s take-home pay data has lagged on the year-to-date average headline CPI (at 6.4%) and this is the reality that households are currently experiencing,” it concluded.
There full report can be found here.
*Info and write-up provided by BankservAFrica