The average monthly take-home pay in South Africa was a fraction higher (0.1%) in May 2021, when compared with a year ago – a time when the country faced a challenging economic predicament at the height of the Covid-19 pandemic, the latest BankservAfrica Take-home Pay Index (BTPI) shows.
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“The progress to recovery has been swift. Although the normal pre-Covid-19 levels have not been reached yet, we believe our take-home pay and employment numbers reflect substantial progress,” BankservAfrica said in a statement on Wednesday (23 June).
“The real take-home pay for May 2021 was R12,650, which was slightly lower than April’s figure but 0.1% higher than May 2020,” said Shergeran Naidoo, BankservAfrica’s head of stakeholder Engagements.
“Interestingly, three years ago, the average take-home pay was R12,706 – this is a good indication that salaries have stagnated mainly as a result of the pandemic and its economic impact.”
However, both nominal average pay of R14,594, and real take-home pay for May, was down from April’s figures of R15,083, and R12,950, respectively.
May salary numbers indicate the slow return of jobs
The country’s average take-home pay increased at a rate similar to that of inflation in May 2021. This is despite inflation being around 5% on a year-on-year basis.
The real salary increases are slowing down, the automated clearing house said, as lower-paid employees make their way back into the job market.
This is evident in the total number of estimated monthly payments in May 2021, which increased by 13.1% between 2021 and 2020, following the May 2020 lockdown collapse.
However, the number of salaries paid decreased by 11.7% in the same period between May 2020 and May 2019.
“Clearly, job retention is in a healthier state. Most of the formal sector jobs at larger employers have returned.
“But, the overall recovery towards job creation is not yet complete. When comparing the number of estimated monthly payments, the number of payments are still below the May 2019 and May 2018 numbers,” BankservAfrica said.
“Our data on the total aggregate take-home pay in real terms revealed the total wages paid into employee accounts were 3.7% higher than in May 2020. However, on this basis, May 2021 had fewer wages paid into bank accounts than in the same periods in 2019 and 2018.”
On every level, the May 2021 numbers for employment, aggregate wages paid to employees, as well as average and median take-home pay, improved from May 2020.
At the same time, the figures – other than average and median take-home pay – were well below the May 2019 numbers, it said.
The median salary decreased by 1.5% from May 2020 as the numbers of weekly paid employees reappeared on the payrolls.
Moreover, the tax holiday given to many last year has had an impact on the median take-home pay more than on the average.
BankservAfrica said that the previous record levels have not yet been achieved despite the recovery reaching later stages.
The current lockdown level 3 and Covid-19 third wave may still impair employment and salaries.
“Although job retention is in a healthier state, the overall recovery towards job creation is not yet complete.
“When comparing the number of estimated monthly payments, the number of payments are still below the May 2019 and May 2018 numbers,” said Mike Schüssler, chief economist at economists.co.za.
Salaries in May 2021
The latest salary numbers will reflect well in the year-on-year retail sales and other consumer spending in May 2021.
However, the quarterly aggregate salary and pension payments seem to be flattening in the last few months, BankservAfrica warned.
“While we do not know when employment at large formal sector establishments will surpass the previous highs, we believe that most jobs that were lost are back. But, some sectors, such as travel, may take another year or two to fully recover,” said Naidoo.
Real private pensions paid via the BankservAfrica system increased by 6.8% in May 2021. This is the eleventh month of positive real increases, it said.
May was the seventh month of BankservAfrica Private Pension Index (BPPI) showing increases at twice the rate of inflation.
But these increases were not only due to the lower inflation numbers as inflation has started to increase.
“Therefore, it suggests state pensioners may have had pension fund increases.
“There are also cases of the withdrawal of small pension amounts, which has resulted in the system reflecting fewer pensioners, possibly leading to the consolidation of pension accounts,” the group said.
Approximately 22,000 extra payments from two smaller government pension funds were made, keeping the total number of private pensioners above 650,000 private pensioners.
These payments were all small indicating that there was some sort of a delayed increase within the two funds.
Nonetheless, average pensions still increased by 11.5% in nominal terms in May 2021, BankservAfrica said.