Average salary at highest level since 2012 in September

The average take-home pay reached its highest level yet in September as the average salary surpassed the R17 000 mark. Easing inflation levels, fuel price relief and lower interest rates gave a boost to salary earners and their spending potential ahead of big year-end shopping days.

The upward momentum continued in September 2024 and the average salary was the highest level since the inception of the BankservAfrica Take-home Pay (BTPI) series in 2012.

“The average nominal take-home pay reached R17 171 while in real terms salaries adjusted for inflation tracked higher at R14 969, improving by 5.6% year-on-year,” Shergeran Naidoo, BankservAfrica’s head of stakeholder engagements, says.

Moderating consumer inflation will likely also benefit salary earners and boost their purchasing power. Real take-home pay has increased by 2.2% in the first nine months of 2024 compared to the full-year average in 2023. In nominal terms this has climbed by 6.3%, he says.

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Various factors helped to increase average salary

Elize Kruger, an independent economist, says the suspension of load shedding for almost seven months, significant easing of inflation, the new political landscape and the first interest rate cuts since March 2020 provided a much-needed boost to confidence.

“Firm indications that the government of national unity will focus on accelerating structural reforms to overcome growth and job creation obstacles are also welcomed.”

 She says a trend that has been developing recently, especially in unionised industries, is for companies to enter into longer-term wage agreements for up to five years. “Often, these result in above-inflation outcomes for salary earners and have the added benefit of labour stability and cost certainty for companies.

“With the average headline inflation forecast to average at 4.5% in 2024 and 2025 compared to 6.0% in 2023, workers locked into these agreements are expected to receive handsome real increases as the lower inflation outcomes are realised.”

While estimates point to an average salary increase of around 6% in 2024, Kruger points out that the latest data in Statistics SA’s Quarterly Employment Statistics suggest a somewhat lower average increase for the first six months of the year.

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Notable difference in average salary in various sectors

The nominal increase in average monthly earnings in the formal non-agricultural sector, including overtime and bonuses, was 4.7% in the first half of 2024. However, notable differences are evident. The transport (7.0%) and finance (6.6%) sectors recorded the highest increases in the first six months of 2024, unlike community and social services (2.3%) and manufacturing (3.0%).

“Overall, with 2024 being a year of two distinct halves, the higher levels of economic growth forecasts for the second half of the year could trigger a further uptick in salaries in more sectors towards year-end,” Kruger says.

“This improvement in purchasing power will provide much-needed relief to cash-strapped households and could, in combination with fuel price relief and lower interest rates, support consumer spending in the latter part of the year.

“Black Friday sales are also likely to benefit from the anticipated improvement in household finances,” Kruger says.

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Private pensions also increased

The BankservAfrica Private Pensions Index (BPPI), tracking the pension payments of about 700,000 pensioners, also increased in nominal and real terms in September 2024.

“The average nominal private pension increased to R11 410 in September 2024, up from August’s R11 161 and 6.2% higher than a year ago,” Naidoo says. In real terms, the average private pension performed better on a monthly basis and remains 2.3% above a year earlier.

“When comparing the average nominal BPPI for the first nine months of 2024 to the corresponding period one year earlier, a 5.1% increase is shown. The real BPPI is just marginally above the same period in 2023.”

Naidoo says the introduction of the two-pot retirement system on 1 September generated awareness among members about their retirement savings. “Given that the new system has only recently been active and with payments lagging, it is still early days for empirical insights from the BankservAfrica pension payments data.”