South Africans earning less while paying more for everything

South Africans are earning less while paying more for everything, with the tough economic conditions making it harder for consumers to keep the lights on and feed their families.

They were much better off a year ago, while there is no hope for conditions to improve soon as rolling blackouts curtails economic growth.

According to the monthly BankservAfrica Take-home Pay Index (BTPI), take-home pay as well as the number of salaries paid in April declined compared to a year ago, signalling a troubled job market in dismal economic times.

The average nominal take-home pay was R14 534, a sizeable decline on the R15 170 recorded a year ago, while 123 000 fewer salaries were paid.

“As companies come under strain from the harsh rolling blackouts, high production costs, rising interest rates and moderating demand, the environment remains unfavourable for comfortable wage increases or job creation. Organisations will likely remain in ‘survival mode’ for an extended period of time,” says Shergeran Naidoo, BankservAfrica’s head of stakeholder engagements.

Elize Kruger, an independent economist, says the BTPI also declined in real times as inflation remains at elevated levels, further eroding the buying power of average salaries. The average salary was R13 524 in real terms, declining by a notable 10.4% during the past year.

“Despite April’s headline inflation lowering to 6.8% and forecasts suggesting prices could moderate at a faster pace in the coming months, the recent depreciation of the rand exchange could throw a spanner in the works if the rand remains at current weaker levels for a prolonged period.” 

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April data erased gains of March

Kruger points out that after two consecutive months of moderate increases in the number of salaries paid into South Africans’ bank accounts, BankservAfrica’s data, adjusted for weekly payments, suggests that more than half of these gains were reversed in April with 123 000 fewer salaries paid.

“The South African job market is still recovering from heavy job losses from the impact of the Covid-19 pandemic, a challenge amid the low growth reality in South Africa. In addition, South Africa is not only in catch-up mode, but must also accommodate the constant growth in the working age population.”

She says with little indication of a different economic environment in 2023 and an 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.

One light at the end of the tunnel was average private pensions, measured in the BankservAfrica Payments Pensions Index (BPPI), that continued to reflect good growth.

“In nominal terms, the average private pension at R10 305 showed a monthly improvement and a 6.4% year-on-year growth. The real average private pension was R9 401 in April, marginally lower compared to a year earlier, but still signalling that the buying power of pensioners has been preserved amid the high inflation environment,” Naidoo says.

According to the report notable currency depreciation in recent weeks, lack of political and policy certainty and a general lack of progress to resolve the growing pile of crises in South Africa are pushing confidence levels down, for both households and businesses.