according to the latest BankservAfrica Disposable Salary Index (BDSI)
and Private Pension Payments (BPPI) indexes – a trend that began in
January this year due to economic pressures.
BankservAfrica tracks take-home pay and pensions that are paid via the
South African payment system on a monthly basis and provides valuable
insights on South African consumers as well as salary and pension
trends.
For the second consecutive month, disposable salaries - as paid
through the South African payment system via BankservAfrica – declined
in real terms due to increased inflation.
"The decline of 2.2% year-on-year in real terms in July is the biggest
since early 2015 when government salary increases were delayed by
three months," says Dr Caroline Belrose, Head of Knowledge and Risk
Services at BankservAfrica.
The impact of higher inflation and the weak economy is very evident.
Although salaries increased in nominal terms by 4% year-on-year, the
inflation rate is far higher. This is exacerbated by the fact that
formal sector employees are not getting salary increases to make up
for this. High-income earners are also bearing this burden.
"Take-home salaries are being squeezed further by increases in
deductions on gross salaries, such as personal tax hikes, and medical
insurance, which increased by 9.2%, nearly one-and-a-half times the
inflation rate," says Mike Schüssler, Chief Economist at Economists
dotcoza.
Furthermore, the data shows that the weakened economy has reduced the
probability of bonus payments, while the strained economic conditions
have lowered hopes of salary increases.
The only notable difference was in the public sector. Representing the
largest employment sector, salaries here increased by 7.6%. If it had
not been for the late payment of government salary increases last
year, the data shows that most of the month's salary increases would
have been below the rate of inflation. As a result, government
employees, with two effective salary increases – due to the late
payment of salaries last year – had a substantial impact on salary
increase in this month's BDSI.