Real take-home salaries down 3.1% in October

Real take-home salaries down 3.1% in October

Average take-home pay in South Africa decreased by 3.1% in real terms in October, the steepest year-on-year decline since September 2019, according to the latest BankservAfrica Take-home Pay Index (BTPI).

BankservAfrica said the decline follows the high base in October last year, when casual employees were returning to work.

The average real take-home pay was R12 412 in October this year compared with R12 804 in October 2020.

In nominal terms, the BTPI increased by 1.7% year-on-year, from R14 795 in October 2020 to R15 042 in October 2021.

In real terms, average take-home pay has remained between R12 000 and R13 150 over the past 25 months, which indicates that salaries in the formal sector have not changed drastically. This is similar to the 10-year trend in real terms.

The median or typical take-home pay in real terms in October 2021 reflected the biggest decline since 2018, when the Southern Africa Customs Union countries were excluded from the BTPI. The 7% decline indicates that fewer employees who are generally paid more than the typical employee were paid in October, BankservAfrica said.

Median take-home pay was at its lowest level since July 2019 in real terms.

The typical take-home salary has remained below R11 000 for the past four months. This is the longest period of typical pay being below R11 000 in the past two years.

This trend may indicate that South Africa has lost many high-salary jobs as state-owned enterprises, such as Denel and SAA, have faced challenges. High earners in the civil service or other private sector industries are also not being fully compensated for increases in inflation, BankservAfrica said.

BankservAfrica has also corrected the increase in average take-home pay it reported for September this year, when most civil servants received backdated increases.

It said real take-home pay increased by 4.1%, not 8.3%, in September.

BankservAfrica said it checked the system for more than one payment into the same account. This revealed that about 816 000 accounts had double payments. A further 366 000 accounts were also thought to have received extra payments, but these were normal payments, because many people receive salaries twice a month or more. The extra 366 000 payments should not have been subtracted.

The result is that the nominal average take-home pay in September was R15 266 (R12 571 in real terms). The increase remains 4.1% higher than a year ago, with the trend still upwards, but lower than reported on at first.

The difficulty was in understanding the extra payments made by large employers, such as the state, when investigating the reasons behind the extra payments. There were unlikely to be over one-million backdated paycheques for increases.

“The author has subsequently relooked at the data, as a result of the lower payments made in October 2021, which showed that some of the extra payments made in September 2021 were meant for October 2021. With our normal smoothing, it would not have been necessary to remove these payments, as we work on a three-month cycle (or 13 weeks for weekly) to make the total payments and the BTPI smoother.”

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