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The average take-home pay in South Africa – as measured by the BankservAfrica Take-home Pay Index (BTPI) – grew substantially in July, which should provide some relief to South African income earners amidst the challenging economic environment.
“The average nominal take-home pay in July was R15,503, notably higher than the R14,169 in June and R14,509 in July 2022,” said Shergeran Naidoo, BankservAfrica’s Head of Stakeholder Engagements.
The improvements come amidst a challenging time for the South African economy, including seemingly never-ending load shedding, high-interest rates, a difficult job market and extremely low confidence levels among businesses.
However, it appears that many industries have become far more resilient to load shedding, which has led to an underlying positivity in recent months.
The average take-home pay grew out of its prolonged slump, increasing by 1.2% year-on-year to show the first positive growth since September 2021.
In real terms, the average BTPI grew 6.1% from R13,514 in June to R14,344 in July.
This positive change in salaries driven by the moderation in consumer inflation is seen as a glimmer of hope by Elize Kruger, an independent economist.
Warning signs
That said, Kruger warned that this may not be a sustainable trend.
“The renewed pressure on fuel prices has surfaced again, and the depreciation of the rand exchange rate will add to the cost of imported products, pushing inflation higher,” she Kruger.
Consumers have had some relief, with consumer headline inflation dropping from 7.1% in March to 5.4% in June, which helped to strengthen household purchasing power.
However, September could see a sizeable fuel increase in the cards, which could push headline inflation towards 6%,
This could force the South African Reserve Bank to hike interest rates at the next MPC meeting in September.
“With household finances already under severe pressure, these changes would be very negative for consumers and their spending power,” said Kruger.
Although 63,000 salaries were paid in July 2023, they were not enough to offset the prior month’s losses, with expectations that the job market will remain lacklustre for the rest of 2023.
Pensions
The BankservAfrica Private Pensions Index (BPPI) also increased in both nominal and real terms during July.
“The nominal average private pension increased to R10,943 in July compared to the previous month’s R10,776, 7.5% higher than one year earlier and the highest monthly payment so far in 2023, said Naidoo.
“In real terms, the average real private pension in July 2023 came to R9,971, 2.3% higher compared to a year earlier,” says Naidoo.
This shows that private pensions are still proving to be strong despite growing inflation.
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