South Africans are earning more

South Africans lucky enough to have a job are winning salary increases that are beating inflation, with pension savings rising even more so, albeit from a lower base. The BankservAfrica Disposable Salary Index (BDSI) and Private Pension Index (BPPI) for 2015 shows the average take-home salary was up 6.7% to R12 715, beating the average inflation rate of 4.6%.

Pension bonus

That means real average salaries were 2% higher in 2015 than in 2014. Despite being 46% below the average salary, the average pension for 2015 was R5 840, up 9.1% compared to 2014. Mike Schüssler, chief economist at Economists.co.za, says the figures are even more impressive when looking at the median statistics instead of averages.

The median salary, which was more reflective of what the ordinary South African earned, was still lower than the average at R9 374 in 2015, but had grown 7.1% compared to 2014. Similarly median pensions were up by 10.3% to R3 909.

“That the median has outperformed the average is a surprising fact,” says Schüssler, adding that it’s not what one would expect, compared to other salary surveys, wherein people submit their answers.

“The Bankserv data takes information directly from the bank account, so it suggests that many people are embellishing their salaries.” Another reason, Bankserv says, could have been due to increases in income tax for higher earning individuals while those in lower tax brackets received some relief. “

It may also be a function of some garnishee orders being closed or cancelled allowing more of a person’s salary to go into a bank account,” reads the report. Also, less than 17% of accounts received take-home salaries of less than R4 000. Meanwhile the biggest category, at 38.6% of the sample, was that of employees who get take-home pay of between R10 000 and R25 000.

Schüssler says that, given the economic headwinds of 2015, the data was better than expected. The fact that household debt decreased from 86% of household income in 2009 to 76% was an encouraging sign, while retail sales, which had seen only two real year-on-year declines in 71 months, had increased in real terms for 17 consecutive months.

State wage bill

One worrying aspect going into 2016, Schüssler says, is the government’s salary bill, which Finance Minister Pravin Gordhan will have to contain if SA is going to be in any way able to spend on crucial projects, citing a free university future as impossible in the current climate. Government employees make up almost a third of the Bankserv data. “The wage bill is now 40% of all government expenditure. It’s 14% of GDP, which is third-highest in the world,” says Schüssler.