Global Courant 2023-05-17 16:37:23
Salaries in South Africa have been negatively affected over the past five years.
A new report from BankservAfrica shows that since 2018, a challenging economic environment, including the high unemployment rate, rising inflation and the pandemic, has taken a heavy toll on consumers.
Shergeran Naidoo, head of stakeholder engagement at BankservAfrica, said net pay rose from R12,573 in February 2018 to R15,438 in February 2023 – a growth of 22.8%.
However, compared to the consumer price index of 26.6%, nominal net wages have lagged inflation, depreciating in real terms.
Naidoo said take-home pay kept pace with inflation through 2021; however, it declined in 2022 as the nominal average take-home pay stagnated and lagged the rising cost of living.
“The highest average take-home pay was recorded in February 2022 at R15,760 per month, while the lowest average occurred in April 2019 at R12,446 per month,” he said.
Independent economist Elize Kruger said the economic environment has been exceptionally challenging for businesses over the past 18 months.
Rampant tax cuts, high production costs due to escalating fuel prices, a weaker currency and rising wage pressures, elevated interest rates and declining demand have all contributed to the dismal growth, Kruger said.
“Companies have signaled a shift from potential expansion and investment to becoming less dependent on Eskom and have diverted capital earmarked for investment to self-sufficiency,” she said.
“This conservative ‘survival’ approach is not conducive to employment growth in South Africa and is also holding back wage increases, as shown by the performance of the BankservAfrica Take-home Pay Index in 2022”
Bad news for salaries is further illustrated by BankservAfrica records showing that the number of salaries paid increased by just 455,140 over the past five years.
Kruger said that with indications of an even lower economic growth forecast for 2023 compared to 2022, the economic climate will most likely remain gloomy, resulting in a challenging job market and little room for salary improvements.
The economist noted that net wages can be expected to lag in the coming months.
Economists and analysts have been warning about salaries and their falling value since mid-2022.
In June 2022, Advaita Naidoo, a general manager at recruiting firm Jack Hammer Global, said that even if employees try to keep up with inflation, the pressure varies and margins remain squeezed.
With the country’s economy further tanked with downwardly revised growth expectations, companies will likely want to play it safe and withhold significant raises and bonuses to keep balance sheets stable in these uncertain times.
Pensions
BankservAfrica reports that while pension payments have held up well against inflation, they are still below the average salary in South Africa.
According to the group, a five-year review of the BankservAfrica Private Pensions Index found that nominal pension payouts rose from R7,001 in February 2018 to R10,054 in February 2023, an increase of 43.6%, which is well above the CPI. measured over that period.
“The highest average nominal pension payment was recorded in July 2022 at R10,483 per month, while the lowest average was recorded in February 2018 at R7,001 per month,” said BankservAfrica.
Kruger said the share of average pension payments relative to average take-home pay increased from 55.7% in February 2018 to 65.1% in February 2023, indicating that these payments have outperformed average salaries.
This may be due to investment performance, combined with the resilience attributed to the composition of pension recipients, Kruger said.
Read: ‘Difficult compromises’ are coming to keep South Africa afloat
