South Africa’s average take-home pay reached new heights in September, surpassing the R17 000 mark for the first time since the BankservAfrica Take-home Pay Index (BTPI) series began.
This milestone, which reflects an average nominal salary of R17 171, marks a turning point for salary earners and could significantly influence consumer behaviour as the festive shopping season approaches.
According to Shergeran Naidoo, the head of stakeholder engagements at BankservAfrica, this increase was particularly noteworthy not only because of its nominal value but also due to its real terms increase after accounting for inflation.
“Adjusted for inflation, the average take-home salary now stands at R14 969, which shows a substantial improvement of 5.6% year-on-year,” said Naidoo.
The moderation of consumer inflation is set to enhance the purchasing power of South African workers.
The data reveals that real take-home pay has increased by 2.2% in the first nine months of this year, signalling a welcome trend as it compares favourably to the full-year average in 2023. In nominal terms, salaries climbed by 6.3%, a positive indicator for households seeking to ease financial pressure.
Independent economist Elize Kruger highlighted several factors contributing to this upward trend.
“The suspension of load shedding for almost seven months, coupled with a significant easing of inflation and the introduction of interest rate cuts for the first time since March 2020, has boosted confidence in the economy,” she stated.
Furthermore, indications that the Government of National Unity aims to accelerate structural reforms to address growth and job creation challenges are promising.
On the currency front, Reezwana Sumad, a research analyst at Nedbank Corporate and Investment Banking, noted that the US dollar-rand exchange rate continued to show marginal improvements, hinting at broader, yet cautious, market trends.
Kruger said a notable trend was emerging in unionised industries, where companies are opting for longer-term wage agreements spanning up to five years.
These contracts often result in salary increases surpassing inflation rates, thereby enhancing job stability for workers and maintaining financial predictability for businesses.
“With a projected average headline Consumer Price Index (CPI) of 4.5% for this year and the next, those locked into these agreements are poised to benefit significantly as they witness real salary increases,” Kruger added.
While forecasts suggest an average salary increase of around 6% this year, preliminary data from Stats SA indicate a lower average increase of 4.7% in the formal non-agricultural sector for the first six months.
However, certain sectors such as transport and finance outperformed, recording increases of 7.0% and 6.6%, respectively. In contrast, sectors like community services and manufacturing saw increases of only 2.3% and 3.0%.
Kruger believes that 2024 will present a distinctly bifurcated economic landscape.
“The anticipated growth in the second half of the year could further stimulate salary increases across various sectors as we progress towards year-end,” she explained.
The BTPI’s latest data suggests that this year may be the best for salaries since 2020, with average nominal take-home pay finally outpacing inflation.
Enhanced purchasing power for households, when combined with stabilising fuel prices and lower interest rates, is expected to foster consumer spending in the latter part of the year.
There is also optimism surrounding upcoming Black Friday sales, which could benefit from the improved financial situation of consumers.
Meanwhile, the BankservAfrica Private Pensions Index (BPPI)—tracking pension payments for approximately 700 000 pensioners—has also registered gains.
In September, the average nominal private pension rose to R11 410, up from R11 161 in August, representing a 6.2% increase year-on-year. In real terms, pensions remain 2.3% higher compared to last year.
As the Two-Pot Retirement System was introduced just last month, there is growing awareness among citizens about the management of their retirement savings.
While it is still too early to gather comprehensive data reflecting the impact of this change on pension payments, its introduction signals potential for significant long-term benefits.
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