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South Africa
Thursday, September 17, 2015 - 11:12
Earning above inflation…

Increases in take home pay averaged 8% according to the BankservAfrica Disposable Salary Index (BDSI) over the last twelve months, with the average take home pay breaking the R13 000 per month mark for the first time. The average actual salary was R13 301 in July indicating that the last round of salary increases are still leaving the average employee better off, even after the inflation rate increased to 5%.

BankservAfrica data shows that salaries paid into bank accounts are 2.9% above inflation over the last year, despite higher personal income tax rates and higher medical insurance deductions. Formal sector employees who earn up to R100 000 per month are also seeing their salaries increase across the board.
The median salary increased by 6% since July 2014 to R9 751 per month - 1% higher than the inflation rate recorded for July 2015.
This shows that a broad range of South African employees have seen positive real salary increases over the past 12 months, not just the top management and professionals.

For the first time since BankservAfrica started to collect take home pay data, the share of people taking home between R10 000 and R25 000 reached 36.6%. In total 46.1% of South Africans paid via the BankservAfrica payment system take home R10 000 or more. 53.9% of employees receive less than R10 000 per month in their bank accounts.
While these are electronic payments and exclude cash and intra bank payments, South African formal sector employees continue to beat inflation.
The noted decline of 21% in the number of accounts who receive less than R4 000 per month has been phenomenal. More than 80% of South African employees in the formal sector are now earning take home salaries that are above R4 000 per month.
This trend could continue as fewer garnishee orders are issued these days and salary increases remain above the rate of inflation.

Pension growth beats salary growth for the eighth straight month

Average pension payments to private pensioners increased by 9.1% to R5 854 per month in July - 3.9% higher than inflation. While private pensions as paid electronically via the BankservAfrica payment system are only 44% of take home salaries it is clear that, in the last year, private pensions have grown far faster than salaries. The median private pension also grew by the same percentage of 9.1%, to R3 357 per month.
From these figures it is clear that pensioners have a much lower income, but that income is at least growing at a far better rate than before.
As pension pay outs are typically based on previous years’ asset performance and adjusted annually, this trend should continue at least until the end of the year. It remains to be seen if pensioners continue to see as high growth next year as they did this year, as equity markets have not seen the same growth as in the last few years.
The above inflation increases may remain a burden on the productive sectors of the economy if commodity prices stay low, and this could also bring about more cost pressures for firms going forward.
However it is likely that the above inflation increases in both pensions and in disposable salaries will be positive for consumer spending, particularly retail sales as well as domestic travel as long as the petrol price remains relatively subdued.

Copyright © Insurance Times and Investments® Vol:28.9 1st September, 2015
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