South Africans’ take-home pay in 2022 down by almost 5%

The average take-home pay for 2022 did not increase in 2022, but instead moved sideways, with the average for 2022 at R15 055 per month compared to R15 166 in 2021. It was a fairly dismal year for people who earn a salary, with the average decreasing by almost 5% to R14 633 in December.

According to the latest BankservAfrica Take-home Pay Index (BTPI), the average nominal take-home pay was 4.8% lower than the R15 403 of 2021.

“2022 was an exceptionally challenging year for the economy, with the rising cost of living, higher interest rates and the worst year ever of load shedding, which affected growth. Cumulatively, these headwinds kept a lid on salary increases in a year where consumer inflation reached a 13-year high of 6.9% in 2022,” says Shergeran Naidoo, BankservAfrica’s head of stakeholder engagements.

These figures are in line with a recent report of the South African Reserve Bank (Sarb) that growth of salaries in the private sector remained unchanged at 5.7% compared to 2021, as the average wage settlement rate in collective bargaining agreements came to 6% in the first nine months of 2022.

Naidoo says this proves that nominal wage increases lagged on actual inflation trends during 2022 and, therefore, even more so in real terms, which is confirmed by BankservAfrica’s data that reflected a 6.9% decline in the real average salary recorded in 2022 compared to 2021.

“This created a notable erosion of South Africans’ purchasing power, a trend that filtered through to household’s lacklustre consumption expenditure in 2022,” says Elize Kruger, an independent economist.

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More payments, but for lower-end jobs

Despite these conditions employment levels have increased, catching up job losses incurred during the Covid-19 pandemic and BankservAfrica’s data suggests that 1.072 million more salaries were paid into South Africans’ bank accounts in 2022 compared to the previous year.

StatsSA’s latest Labour Force Survey confirmed this positive trend in employment and indicated that 1.22 million job opportunities were created in the first three quarters of 2022, although this is still not back at pre-Covid levels.

The data shows that 204 075 more salaries were paid in December 2022, but December’s data suggests that although more people were working, new jobs were likely created in the lower income categories, such as opportunities for temporary and seasonal workers during the festive season. “Still, any income remains far better than no income,” Kruger says.

Unfortunately, 2023 does not look good either if you want to earn more. Looking at the economic prospects for the year, Kruger says there are many indications that we could expect ‘more of the same’ in 2023, as the main challenges will likely continue.

“The ongoing energy supply problems, in addition to elevated input costs, rising interest rates and increasingly higher wage demands are placing downward pressure on company profits and margins. Furthermore, a less favourable global economic backdrop adds to the economic challenges for many sectors,” says Kruger.

However, she points out that there is one silver lining: the expectation that consumer inflation should moderate to an average of around 5.5% compared to 6.9% in 2022, supporting consumers’ purchasing power in the coming months.

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At least Private Pensions Index increased

Another positive aspect is that the data shows that private pensions held up well despite higher inflation. The BankservAfrica Private Pensions Index (BPPI) rose to R10 016 in December, showing a 7.2% year-on-year growth, according to Naidoo.

“The average nominal BPPI in 2022 came to R9 982, also 7.2% up on the 2021 average. In real terms, the average real private pension in 2022 was R9 576, 0.3% higher than a year earlier, which preserves the purchasing power of pensioners.”

The BTPI is calculated monthly by dividing the total value of salaries paid into the bank accounts of employees (excluding salaries over R100 000 per month) by the total number of salary payments. Salary payments loaded onto the National Payment System (NPS) and paid by an EFT message that gets processed by the BankServ systems are measured.

These take-home payments exclude UIF contributions, personal income tax and employee pension payments. The BTPI reflects the trend in almost 4 million monthly salary payments, which represents about 37% of all non-farm employees or formal sector in the South African labour market.