South Africans’ salaries remain low, despite job market stabilising

The latest BankservAfrica salary data suggests that the job market is stabilising and although salaries increased slightly in February, they are still lower than a year ago.

This illustrates just how difficult the economic environment remains for many companies that have to deal with rolling blackouts, high production costs, high interest rates, and falling demand due to slow growth.

According to the BankservAfrica Take-home Index (BTPI), take-home pay recovered slightly in February 2023. The average nominal take-home pay increased to R15 186 in February, the highest level since October 2022, but it remains 1.8% below the R15 469 measured a year ago, says Shergeran Naidoo, BankservAfrica’s head of stakeholder engagements.

The slight increase comes after two consecutive months of notable declines in the number of salaries paid into South Africans’ bank accounts. BankservAfrica’s data suggests a few jobs were created in February.

“Although it was less than a thousand, stability in the job market is welcomed amid a challenging economic environment. The job market is still recovering from the heavy losses due to the impact of the Covid-19 pandemic,” says independent economist Elize Kruger.

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Employment and salaries still below pre-Covid

According to the December 2022 Quarterly Employment Statistics report, employment in the non-agricultural business sector stood at 9.968 million at the end of 2022, compared to the pre-Covid level of 10.3 million in the first quarter of 2020.

The job market is clearly still playing catch-up, which remains a challenge amid the low growth reality in South Africa, she says.

“With little indication of a notably different economic environment in 2023, but rather even lower economic growth for 2023 compared to 2022, the job market is likely to remain lacklustre. Furthermore, consumer inflation has been moderating rather slowly, resulting in the ongoing erosion of the purchasing power of households,” says Kruger.

Consumer inflation reached a 13-year high of 6.9% in 2022 and is forecast to average around 5.8% in 2023. However, February’s headline and core inflation rates unexpectedly surprised to by increasing to 7.0%.

Kruger says BankservAfrica’s data confirms the negative impact of inflation on salaries, with an 8.3% decline in the average real take-home salary in February 2023, compared to a year earlier.

“This reality has filtered through to lower consumption expenditure by households and a notable drop in confidence levels as reported in the recent FNB/BER Consumer Confidence Index (CCI), which plunged to -23 index points in Q1 2023, indicating the concern among consumers about South Africa’s economic prospects and their household finances.”

The BankservAfrica Private Pensions Index (BPPI) remained flat compared to the previous month at R10 054, 6.2% higher than a year earlier and slightly above the monthly average in 2022, which realised at R9 985, according to Naidoo.

In real terms, the average real private pension in February 2023 came to R9 473, marginally lower compared to a year earlier, signalling that the buying power of pensioners has largely been preserved amid the high inflation environment. The average nominal pension payment represents 66.2% of the average take-home pay in February 2023.

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Total employment increase

According to Statistics SA’s quarterly formal employment statistics for the fourth quarter released yesterday, total employment increased by 48 000 or 0.5% from 9 920 000 in September 2022 to 9 968 000 in December 2022.

This increase was largely due to increases in trade (49 000 or 2.3%), business services (9 000 or 0.4%) and mining (2 000 or 0.4%). The transport and community services industries reported no quarterly change. However, there were decreases in construction (-10 000 or -1.9%), manufacturing (-1 000 or -0.1%) and electricity (-1 000 or -1.7%). 

Total employment decreased by 94 000 or -0.9% between December 2021 and December 2022, while full-time employment increased by 6 000 or 0.1% from 8 865 000 in September to 8 871 000 in December 2022.

This was largely due to increases in trade (26 000 or 1.4%), mining (2 000 or 0.4%), transport (1 000 or 0.3%) and business services (1 000 or 0.0). The manufacturing industry reported no quarterly change.

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More jobs lost in construction, community services and electricity

However, there were decreases in construction (-16 000 or -3.5%), community services (-7 000 or -0.3%) and electricity (-1 000 or -1.8%). Full-time employment decreased by 9 000 or -0.1% between December 2021 and December 2022, while part-time employment increased by 42 000 or 4.0% from 1 055 000 in September to 1 097 000 in December 2022.

This was largely due to increases in trade (23 000 or 10.3%), business services (8 000 or 4.0%), community services (7 000 or 1.5%) and construction (6 000 or 8.8%), while the electricity industry reported no quarterly change.

There were decreases in transport (-1 000 or -5.9%) and manufacturing (-1 000 or -1.3%). Part-time employment decreased by 85 000 or -7.2% between December 2021 and December 2022.

Total gross earnings paid to employees increased by R67.8 billion or 8.5% from R798.7 billion in September to R866.6 billion in December 2022, largely due to increases in community services, trade, manufacturing, business services, construction, transport, electricity and mining. The year-on-year total gross earnings increased by R39.2 billion or 4.7% between December 2021 and December 2022.