The monthly BankservAfrica Take-home Pay Index (BTPI) experienced another positive month in February amid the better-performing environment, resulting in companies increasing their employees’ average salaries over the last three months.
“The average nominal take-home pay reached R16 085, which was 4.6% growth on a year-ago and also 2.5% up on January’s R15 692,” said Shergeran Naidoo, BankservAfrica’s Head of Stakeholder Engagements.
“In real-terms, the monthly take-home pay tracked higher at R14 354 in February 2024, slightly below year-on-year levels.”
This year’s business environment is expected to improve somewhat, unlike the previous two years where persisting economic challenges significantly impacted companies and their ability to pay inflation-related increases.
“While it is still early days, the BankservAfrica data signals 2024 could be a better year for salaries,” says Elize Kruger, Independent Economist.
Furthermore, although mediocre economic growth is forecast for 2024, the economy is expected to perform somewhat better than the 0.6% reflected in 2023.
This is, however, dependent on reduced load shedding, a moderation in average inflation and interest rate cuts.
A comparison of the average nominal BTPI for the three months to February 2024, to the corresponding three months one year earlier, reveals a 6.4% increase, according to Kruger.
This is broadly in line with the South African Reserve Bank’s (SARB) forecast of an average salary increase of 6.1% for 2024.
Headline CPI moderated notably from 6.9% in January 2023 to 5.3% one year later and is forecast to average around 5.3% in 2024 compared to 6.0% and 6.9% in 2023 and 2022, respectively.
“With a forecast average salary increase of about 6%, 2024 could be a year of positive real increases in average salaries again, which will see the purchasing power of salary earners improve somewhat compared to the previous two years,” said Kruger.
Additionally, a lower inflation rate combined with some relief forecast for interest rates could provide much-needed support to households in terms of their spending ability and confidence levels. This will likely only be evident in the second half of this year.
The repo rate is likely to remain unchanged at next week’s Monetary Policy Committee meeting as sticky headline inflation, the weakness in the rand exchange rate and concerns on food prices could keep the SARB from providing early relief.
The BankservAfrica Private Pensions Index (BPPI) increased in nominal and real terms in February 2024, remaining comfortably above year-ago levels.
Data from approximately 1.5 million main-banked clients of Nedbank reveals a 3% average decrease in personal incomes in 2023 compared to 2022—a notable shift from the 10% increase witnessed between 2021 and 2022.
This dataset encompasses customers who received income or conducted transactions from July to December, reports
Moneyweb
.
Given the current interest rates, the amount allocated to loan repayments among Nedbank’s clientele has surged. Home loan repayments, for instance, have risen by 9% on average over the past year, following a 15% uptick between 2021 and 2022.
Similarly, vehicle finance repayments have increased by 5% (following a 6% rise between 2021 and 2022), while those for personal loans have seen a 6% hike. The bank notes that this situation reflects a strain on consumer disposable income.
Nedbank’s data further reveals declines in expenditure across three of the four main categories. Home improvement spending in the latter half of 2023 was 9% lower than the corresponding period in 2022, with expenditures on clothing and alcohol decreasing by 3% and 1%, respectively.
