This is the average take home pay in South Africa right now

Source: Google Images

The backdated salary payments in the public sector continued to spur the increase in BankservAfrica’s Take-home Pay Index for August.

Real salaries showed improvements on both an annual and on a monthly basis, the group said.

According to Shergeran Naidoo, head: stakeholder engagements at BankservAfrica, the average South African take-home salaries increased by 4.7% in real terms on a year-on-year basis.

This represents the largest annual percentage increase in the BankservAfrica dataset since 2012, he said.

In August, the monthly average real take-home pay reach R14,460 in real terms – 2.7% higher on a seasonally adjusted basis than July.

“However, we expect the rate of increase to slow from the current very high rate,” he said.

According to chief economist at Economistscoza, Mike Schussler, the strong increase is largely due to the continued ­delay in government backdated salary adjustments in the preceding months, which were paid in July and August.

“Delays in municipal and Eskom salary adjustments also contributed to backdated salary payments in August. The other reason for the large real average take-home increase was the decline in inflation, which enabled higher real increases.”

Inflation unexpectedly declined from 5.1% in July to 4.9% in August. The typical person’s take-home pay (the person in the middle of the earnings distribution) showed an increase of 1.6% after inflation.

According to Schüssler, the rate of take-home pay increase is likely to stay higher than usual as other wage settlements are still expected in the coming months from large sectors with many employees, such as mining.

Putting August data into perspective – in real terms, the real average take-home pay was up by 4.4% since August 2013. Considering that the biggest numbers of employees receiving backdated salaries were from the public sector, this increase may not be evident in other parts of the economy.

Interestingly, Schussler said, the previous record level of take-home pay in November 2017 is 0.5% lower than the new record level set in August 2018.

“One would expect that consumer spending, particularly retail sales, will benefit and remain positive for August and September as the extra take-home pay is likely to aid discretionary spending by consumers,” he said.

“As such, private consumption expenditure in the third quarter will most likely be substantially higher than the second quarter when employees are still in doubt about the rate of salary adjustments and timing of their actual backdated payments.”