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Economy
Tuesday, December 1, 2015 - 08:06
Salaries no longer beat inflation, however pensions stay ahead

October 2015 saw a decline of 2.1% after inflation in the BankservAfrica Disposable Salary Index (BDSI).
“With inflation at 4.7%, the nominal increase of 2.5% in October 2015 over October 2014 means that there was a decline of 2.1% in the formal sector salaries, as paid into people’s bank accounts,” says Dr Caroline Belrose, Head of Fraud and Data Analytics at BankservAfrica.
“This is only the second time this year that disposable salaries have declined after inflation is taken into account,” explains Mike Schüssler, Chief Economist at Economists dotcoza. “One possible reason for this could be the high base when compared to October last year, when higher than usual payments were seen due to back pay from wage adjustments, meaning that the base for the measurement is unusually high.”
Weak economic conditions may also be having an impact. According to Belrose, “the salary of the typical person – the person in the middle - also had a smaller than usual increase of 4.9% or just 0.3% above the inflation rate for October, when compared to last year.  With the average salary at R12 840, we noticed a decline of R150 on average when compared to the salaries paid last month.”
This may be likely a reflection that many people are not able to earn the extras in their salary such as overtime, work bonuses or extra commissions for making targets.
“Another consideration is that the back payments of local government salaries are now out of the system so there is a normalisation of salaries, and therefore no exceptions in the data are anticipated for the next few months,” says Schüssler.
Pension increases still beat inflation
In contrast to the salaries this month, pensions continued to increase well above the inflation rate in October 2015, with the average disposable private pension increasing 9% on a year ago.
The average pension paid in October was R5 946 compared to R5 947 in September.  The average private pension increased by 4.2% in real terms. The pensioner in the middle, or the typical pension, increased 9.3% in nominal terms to R3 957 per month.

Copyright © Insurance Times and Investments® Vol:28.12 1st December, 2015
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