The BankservAfrica Take-home Pay Index (BTPI) showed a notable improvement in July, reflecting a better business environment and recovering confidence levels.
However, the ongoing unemployment crisis remains a significant issue.
“The average nominal take-home pay reached R16 358 in July, increasing by 5.9% on a year-on-year basis,” said Shergeran Naidoo, BankservAfrica’s Head of Stakeholder Engagements.
Adjusted for inflation, real salaries rose to R14 440 in July 2024, marking a 0.9% year-on-year growth.
The BTPI indicates trends in South African salaries, derived from the salary payments made to approximately 3 million people (about 36% of the country’s workforce).
“While not reflecting linear growth, take-home pay has so far surprised to the upside in 2024, reflecting an improved business environment. The reprieve from load shedding for almost five months, moderating inflation, a new political landscape, and the prospect of lower interest rates as soon as September, have all provided a much-needed boost to confidence,” said Elize Kruger, Independent Economist.
Comparing the average nominal BTPI for the first seven months of 2024 to the same period in 2023, there was a 6.6% increase. In real terms, the increase was 1.2%.
“If this trend is sustained for the remainder of the year, 2024 will likely be the best year for salaries since 2020 with the increase in average nominal BTPI beating inflation. Improved purchasing power will go some way to supporting cash-strapped household budgets,” said Kruger.
Despite the positive take-home pay figures, the unemployment rate has risen in the first half of 2024, with 73,000 job opportunities lost compared to the end of 2023.
The unemployment rate climbed from 32.1% in Q4 2023 to 33.5% in Q2 2024, the highest in two years. It appears that salary increases may have negatively impacted job opportunities in some sectors.
“The South African economy is in urgent need of an enabling environment that could foster accelerated growth and drive much-needed job creation,” said Kruger.
The first phase of Operation Vulindlela has boosted confidence by accelerating structural reforms and economic growth.
This phase has fast-tracked reforms to increase privately-owned energy generation capacity, address the country’s failing freight rail lines and ports, and unblock the work permit system.
The second phase, supported by the Government of National Unity (GNU), will focus on reviving municipalities and addressing issues related to housing, public transport, and digital infrastructure.
These efforts are expected to boost confidence and productivity levels, adding momentum to the positive trend.
The BankservAfrica Private Pensions Index (BPPI), which tracks pension payments to about 700,000 pensioners, showed moderation in both nominal and real terms in July 2024.
“The average nominal private pension subsided to R11 180 in July 2024 unlike the previous month’s R11 270. This was still 2.1% higher than a year earlier,” said Naidoo.
In real terms, the average BankservAfrica BPPI for July 2024 moderated on a monthly basis and dipped 2.4% below a year earlier.
Comparing the average nominal BPPI for the first seven months of 2024 to the same period in 2023, there was a 5.2% increase. The real BPPI remained flat compared to the same period in 2023.
With the Two-Pot Retirement System set to be implemented on 1 September 2024, the pension industry is currently in sharp focus.
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