SA salaries again decreased in May to lowest level on record

South Africans’ salaries decreased again in May, due to continuing economic woes, higher inflation and low confidence levels. Average private pensions, on the other hand, remained robust and reflected higher payouts than a year ago.

According to the latest BankservAfrica Take-home Pay (BTPI) and Private Pensions (BPPI) indices, the average nominal take-home pay slipped marginally in May to R14 457, remaining 2.7% below the level recorded a year ago.

“In the dismal economic environment, evidence of resilience has been coming to the fore with better-than-expected economic data releases from the mining and manufacturing sectors that surprisingly increased despite the heavy load shedding in April, suggesting these industries have become more resilient,” says Shergeran Naidoo, BankservAfrica’s head of stakeholder engagements.

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“However, confidence levels in the economy remain at shockingly low levels, hampering the possibility of an economic recovery. The RMB/BER Business Confidence Index (BCI) declined for a fifth consecutive quarter to reach the lowest confidence level since 2020.

“The Absa/BER Quarterly Manufacturing Survey also shows manufacturing business confidence remained unchanged, suggesting more than 80% of respondents are unsatisfied with business conditions.”

Low confidence bad for job creation

Independent economist, Elize Kruger, says an environment of such low confidence is not conducive for job creation or comfortable wage increases, as confirmed by the BTPI in May.

“With inflation remaining at elevated levels, the purchasing power of the average salaried worker has flattened.”

Kruger says while the consumer price inflation cycle most likely reached an upper turning point at 7.8% year-on-year in July 2022, the downward trend has been disappointingly slow. However, April’s headline inflation figure surprised at 6.8% year-on-year and the next few months should see more moderation at a faster pace.

Private pension payments measured in the BankservAfrica Private Pensions Index (BPPI) remained resilient despite the impact of inflation.

“In nominal terms, the average private pension ticked up to R10 247 in May, 6.7% higher than a year ago and the highest monthly payment so far in 2023,” says Naidoo.

In real terms, the average private pension in May 2023 came to R9 574, marginally higher compared to a year earlier, signalling that the purchasing power of pensioners has largely been preserved amid the high inflation environment.

Kruger says the job market remains uninspiring. BankservAfrica’s data suggests that an uptick in the number of salaries paid into South Africans’ bank accounts in February and March largely reversed in April and May, leaving the job market essentially flat.

“With little indication of a different economic environment, but rather even lower economic growth forecast for 2023 compared to 2022, the job market and salary adjustments are likely to remain lacklustre for the remainder of the year, a scenario that could only exacerbate the unemployment crisis,” Kruger says.