Global Courant
South Africa is losing a large number of wealthy South Africans and the UK is one of the most popular destinations for expats.
Finance Minister Enoch Godongwana said there has been a trend of “higher-income mobile earners” since 2018, which he said cost the country billions in taxes.
Godongwana added that more than 32,000 people in South Africa have changed their place of residence between 2017 and 2021, with more than 1,000 people earning more than R1 million a year.
One of the most popular destinations for South African emigrants is the UK, with thousands moving to the country each year to work or study.
Given the popularity of the UK for South African emigrants, BusinessTech decided to compare the average salary across industries in both countries.
We looked at the latest data from South Africa’s Quarterly Employment Survey and the UK’s Annual overview Hours and Earnings. It should be noted that the sectors in South Africa and the UK may differ slightly.
For example, the public administration sector in the UK was compared to the community, social and personal services sector in South Africa.
However, if there was no clear distinction between countries, such as the UK’s fourth largest sector, information and communications, the sector was omitted from the list.
Looking at the data, the average annual salary in the UK is much higher than in South Africa.
Industry UK Annual Profit (GBP) UK Annual Profit (ZAR) SA Annual* Profit Difference Electricity, Gas Supply £45 770 R1 114 060 R721 604**
R392 456
Finance and Insurance Activities £43 710 R1 063 919 R386 976
R676 943
Mining & Quarries £43 091 R 1 048 852 R384 064
R664 778
Construction £36 259 R 882 177 R 286 808
R595 309
Public Administration £35 829 R871 716 R409 704
R462 012
Transport and storage £34 028 R827 898 R382 252
R445 646
Water supply £34 010 R824 759 R721 604**
R103 155
Production £32 770 R794 688 R312 716
R481 952
*Converted from quarter to year
**The same salary is given in QES data
Not as bad as it seems
It should be noted that the rand has recently bottomed out – well above R24/£. This follows ongoing tax cuts and possible ramifications between South Africa and the West over allegations that South Africa supplied arms to Russia.
Moreover, although jobs in the UK bring in more income, things in the UK cost a lot more than in South Africa.
The best way to see this is by using the Big Mac index, which measures the real value of currencies through two methods: a direct measure of purchasing power parity (PPP) and a modified index that takes into account local GDP data.
In January, when the index was published, a Big Mac in South Africa cost R49.90 in South Africa and $5.36 in the US – the implied exchange rate is R9.31.
However, the difference between this and the exchange rate at the time, R17.21, suggests that the rand is 45.9% undervalued, the 11th most undervalued currency in the index.
The However, the British pound was much less undervalued.
In the UK, a Big Mac costs £3.79, with an implied exchange rate of 0.71.
However, the difference between that number and the actual exchange rate, 0.81, indicates that the pound is undervalued by 12.9% against the US dollar.
Put another way, a Big Mac in the UK is 85% more expensive than in South Africa, implying – at least on a rudimentary level – that the Rand has much more purchasing power.
Therefore, although jobs in the UK pay more than in South Africa, the cost of living at home is much cheaper.
Read: ‘Surprise’ fuel tax increase could drive up flight prices in South Africa
