South African salaries for the month of September this year reflected the fastest growth on record as the average take-home pay, before inflation, increased by 13.5 percent, according to the latest data from the BankservAfrica Take-home Pay Index
South African salaries for the month of September this year reflected the fastest growth on record as the average take-home pay, before inflation, increased by 13.5 percent, according to the latest data from the BankservAfrica Take-home Pay Index (BTPI).
However, the automated payments clearing house in Africa which processes billions of low values card, ATM and EFT transactions annually said that this momentum was likely to be short-lived.
BankservAfrica’s Head of Stakeholder Engagements Shergeran Naidoo said that the nominalised average salary stood at R15 794 in September this year which was one of the highest on record and in years.“In real terms, the average salary was R13 047, representing a substantial growth of 8.3 percent year-on-year,” Naidoo said.
The payments partner said that the surprising growth observed in the monthly BTPI could be attributed to salary adjustments for civil servants as the latest salary data held over 800 000 extra payments, mostly from government departments. This was said to reflect the delayed implementation of the Public Service Co-ordinating Bargaining Council’s salary adjustment for civil servants for a cash allowance that was payable backdated from the beginning of April this year to the end of March next year. As these cash allowances backdated to April, BankservAfrica said their data showed 400 000 payments were made for the April to August 2021 period. It said that according to its data, another 400 000 payments were made in September this year. These contributed 80 percent of the increase in September’s take-home pay data.
Another factor was said to be overtime pay for July’s unrest as the firm said it noted overtime pay was made to the South African Police Service (SAPS) and the South African National Defence Force (SANDF) member for their extended duty during the July unrest period, adding R1 billion to the BTPI’s overall salaries. Therefore, the overtime pay pushed up the average take-home pay in the BTPI. Overtime pay on this scale was said to be unlikely to occur any time soon. It said that there may be some overtime pay during the upcoming municipal elections next week even though they may not reach the above mentioned extent.
The third factor was said to be the low take-home pay base for September last year when the economy began recovering as more casual workers gradually returned to the workplace after being affected the most during the worst of the Covid-19 pandemic crisis. As a result, the take-home pay in September last year reached a low base and the average take-home pay dropped from time to time during the year 2020.
Economists.co.za chief economist Mike Schüssler said that all these factors indicated that the average take-home pay would not increase at September’s rate in the next month or so. “The worldwide supply chain issues and the continuing shocks from July’s unrest are likely to constrain economic growth and affect salary increases. We, therefore, expect a downward adjustment for salaries in the coming months, ” Schüssler said.
In its Salary Budget Planning Report released this week, global advisory, broking and solutions company Willis Towers Watson said that the fall of pay freezes could see South African businesses paying their employees a 5.5 percent pay rise next year. The rise was said to be an improvement on the 4.7 percent average increase paid this year. It said that with inflation forecast at 4.2 percent to 4.5 percent next year, this gave a real terms rise of up to 1 percent. This came as the proportion of businesses expecting to freeze pay altogether was set to fall from 12 percent this year to 5 percent next year.
Meanwhile, banked private pensions also remained strong during September. “According to the BankservAfrica Private Pensions Index (BPPI), the average private pension in real terms reached a new record to stand at R7 877 and 4.6 percent higher on a year-on-year basis,” said Naidoo.
He said that adding to the robustness of the BPPI was the new rule change that allowed private pensioners to withdraw all their pension savings once the capital amount was under R270 000. According to Schüssler, this has prompted pensioners in the lower end of the income spectrum to withdraw their funds and leave the system, according to.
Since the rule change for pensioners, the average real pension, still on the firm’s system, was said to have increased by over 10 percent.
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