The average nominal take-home pay slipped in June, according to the BankservAfrica Take-home Pay Index (BTPI), which tracks about 4 million salary earners in South Africa.
“At R15 492, the average nominal take-home pay for June was down from May but still 6% up on year-on-year levels,” said Shergeran Naidoo, BankservAfrica’s Head of Stakeholder Engagements.
In real terms, salaries adjusted for inflation tracked lower monthly at R13 634, and only 0.7% up on year-ago levels.
An analysis of the first six months of the year reveals that 2024 remains on course to be the first year since 2020 where the increase in average nominal take-home pay beats inflation.
With no load shedding over the past four months and moderating inflation, the business environment has improved significantly compared to the previous year, positively influencing companies’ ability to offer better salary increases in 2024.
When comparing the average nominal BankservAfrica Take-home Pay Index for the first half of 2024 to the same period one year earlier, a 6.7% increase was observed.
A similar comparison in real terms showed a 1.3% increase.
“If this trend could be sustained throughout the year, 2024 will be the first year in which the increase in average nominal take-home pay beats inflation since 2020,” says Elize Kruger, Independent Economist.
The trends emerging from the BankservAfrica dataset align with views expressed by other institutions.
Remchannel, part of Old Mutual's employee remuneration and benefits solutions, indicated in its April 2024 Salary and Wage survey that average pay increases granted so far this year at local companies averaged 6.1%, beating consumer price inflation.
The Remchannel report noted that the cost-of-living crisis in South Africa has forced businesses to reassess their strategies for attracting and retaining talent by re-evaluating their employee benefits.
More employers are giving employees early access to their salaries, ‘earned wage access’, subject to financial education. This means that employers are now paying workers more frequently than once a month, helping them manage their needs more effectively.
“Two 25bps cuts in interest rates are possible by year-end and could alleviate the pressure on households with credit exposure somewhat while stimulating retail expenditure,” said Kruger.
The BankservAfrica Private Pensions Index (BPPI), which tracks the pension payments to about 700 000 private pensioners, improved in June 2024.
“The average nominal private pension increased to R11 233 in June 2024 compared to the previous month’s R10 697, 4.6% higher than a year earlier, and the first time above R11 000 since October 2023,” said Naidoo.
In real terms, the average BankservAfrica BPPI for June 2024 increased on a monthly basis but remained 0.6% below a year earlier.
The pension industry is currently in sharp focus given that the Two-Pot Retirement System has been signed into law and will be implemented on 1 September 2024.
The new dispensation will likely create a greater awareness among members about their retirement savings, which is welcomed and helpful.
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