Global Courant 2023-04-26 14:32:35
According to the most recent BankservAfrica Take-home Pay Index (BPTI), the unexpected rise in headline inflation in March, among other factors, led to a marginal decline in take-home pay over the month, among other factors.
However, a new trend is emerging in the local labor market as more companies operate in the challenging economic environment of persistent outages and higher costs.
“Average nominal take-home pay fell to R15,321 on a monthly basis in March,” said Shergeran Naidoo, Head of Stakeholder Engagements at BankservAfrica. “However, this was still 1.8% higher than the R15,046 recorded a year earlier.”
Salaries measured in the BTPI have been disappointing over the past 12 months, Naidoo said.
Consumer inflation in 2022 reached a 13-year high of 6.9% (2009: 7.1%), resulting in significant erosion of household purchasing power.
Headline inflation in March surprised on the upside, ticking higher to 7.1% y/y against expectations of 6.9%, with broad-based price pressure pointing to a sticky pricing environment.
The recent fall in the rand exchange rate and the additional cost of production due to the tax shedding and associated extra spending have clearly added an additional cost layer to the economy.
“With inflation remaining high for longer than hoped and with little indication of a markedly different economic environment in 2023, wage adjustments and the labor market are likely to remain lackluster this year,” said independent economist Elize Kruger.
BankservAfrica data – adjusted for weekly payments – suggests some job creation in February, and data for March confirms the tentative recovery with about 216,000 more salaries paid.
The local labor market is still recovering from heavy job losses during the Covid-19 pandemic, which remains challenging amid South Africa’s low growth. According to the March 2023 Quarterly Labor Force Survey, total employment was 15.9 million at the end of 2022, compared to the pre-Covid level of 16.4 million in the fourth quarter of 2019.
Data from BankservAfrica points to more volatility in lower-income categories, indicating that companies are opting for more casual or casual workers over permanent jobs.
“Mean take-home pay has also moved largely sideways since 2021, suggesting low to unchanged salary adjustments in today’s ‘survival economy,’” Kruger said.
Private pensions were also impacted by inflation in March, according to the BankservAfrica Private Pensions Index (BPPI).
“On a monthly basis, the nominal average private pension fell marginally to R10 036, 6.7% higher than a year earlier, and slightly above the monthly average in 2022, which was realized at R9 987,” says Naidoo.
In real terms, the average real private pension stood at R9 414 in March 2023, just slightly lower compared to a year earlier, indicating that pensioners’ purchasing power has largely been preserved amid high inflation.
BankservAfrica will publish a special report ‘Five-year Review of Take-home Pay and Private Pensions’ in May 2023, outlining the main developments in these indices since 2018.
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