In September 2024, the average salary exceeded R17,000, marking the highest level since the BankservAfrica Take-home Pay (BTPI) series began.
Working South Africans have gained an average of R2,197 over the past two years - R14,974 in September 2022 - or an increase of just R91.54 each month, with inflation seemingly much higher than that over the same period.
With R91.54, you can buy the following:
Groceries: You could get a loaf of bread, a litre of milk, and a dozen eggs.
Snacks: A large bag of chips and a soft drink.
Personal Care: A tube of toothpaste and a bar of soap.
Transport: A few short taxi rides within a city.
Fast Food: A basic meal from a fast-food restaurant.
Recent economic developments have boosted salary earners, potentially impacting the upcoming busy shopping period.
“The average nominal take-home pay reached R17,171 while in real terms, salaries adjusted for inflation tracked higher at R14,969, improving by 5.6% year-on-year,” said Shergeran Naidoo, BankservAfrica’s head of Stakeholder Engagements.
Moderating consumer inflation is expected to benefit salary earners and enhance their purchasing power. Real take-home pay has increased by 2.2% in the first nine months of 2024 compared to the full-year average in 2023, with a nominal rise of 6.3%.
“The suspension of load shedding for almost seven months, significant easing of inflation, new political landscape, and the first-interest rate cuts since March 2020, have provided a much-needed boost to confidence,” said Elize Kruger, independent economist.
The Government of National Unity’s focus on accelerating structural reforms to address growth and job creation obstacles is also welcomed.
A recent trend, especially in unionised industries, is for companies to enter into longer-term wage agreements, often resulting in above-inflation outcomes for salary earners and providing labour stability and cost certainty for companies.
With the average headline CPI forecast to average 4.5% in 2024 and 2025 (vs 6.0% in 2023), workers in these agreements are expected to receive significant real increases as lower inflation outcomes are realised, according to Kruger.
While estimates suggest an average salary increase of around 6% in 2024, StatsSA’s Quarterly Employment Statistics indicate a somewhat lower average increase for the first six months of the year.
The nominal increase in average monthly earnings in the formal non-agricultural sector, including overtime and bonuses, was 4.7% in H1 2024. However, notable differences are evident.
The transport (7.0%) and finance (6.6%) sectors recorded the highest increases in the first six months of 2024, unlike community and social services (2.3%) and manufacturing (3.0%).
“Overall, with 2024 being a year of two distinct halves, the higher levels of economic growth forecasts for the second half of the year could trigger a further uptick in salaries in more sectors towards year-end,” says Kruger.
The BTPI and industry indications suggest that 2024 could be the best year for salaries since 2020 when the average nominal take-home pay beats inflation.
“This improvement in purchasing power will provide much-needed relief to cash-strapped households and could, in combination with fuel price relief and lower interest rates, support consumer spending in the latter part of the year. Black Friday sales are also likely to benefit from the anticipated improvement in household finances,” said Kruger.
The BankservAfrica Private Pensions Index (BPPI), which tracks pension payments to about 700,000 pensioners, increased in nominal and real terms in September 2024.
“The average nominal private pension rose to R11,410 in September 2024, up from August’s R11,161 and 6.2% higher than a year earlier,” said Naidoo.
In real terms, the average private pension performed better on a monthly basis and remains 2.3% above a year earlier.
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