Data indicated that the number of salaries paid this month decreased, which could have been as a result of job losses in the face of a struggling economy and the energy crisis.
The average nominal take-home pay reflected a marginal uptick in September 2022 while fewer salaries were paid during the month, suggesting some job losses in the struggling economy, according to the latest data in the BankservAfrica Take-home Pay Index (BTPI).
“The average nominal salary recovered slightly, increasing by 2.4% to reach R15 063 in September compared to a revised R14 711 in August. This is encouraging,” said Shergeran Naidoo, BankservAfrica’s Head of Stakeholder Engagements.
But salaries still lag behind inflation
While it would appear that the average nominal salary has stabilised somewhat in the past two months, it has also become evident that salaries have lagged behind the average headline inflation in 2022.
“In line with expectations, consumer inflation moderated somewhat off the 13-year high of 7.8% reached in July, to 7.5% in September, but remains at elevated levels,” says independent economist Elize Kruger.
This moderation was driven by lower fuel prices, however, the higher food prices and a broader-based upward pressure evident in the consumer basket’s prices offset the impact.
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The South African Reserve Bank hiked the benchmark interest rate by a cumulative 275bps since November 2021 and has signalled that more hikes are on the cards.
“The average salaried person’s finances are likely to remain strained as reflected in the 8.3% y/y decline in the real average salary recorded in the BTPI in September. However, as we forecasted that July’s 7.8% headline CPI print would be the upper turning point of the current inflation cycle, the pressure should start to alleviate slightly as inflation moderates towards year-end. We forecast inflation could be at around 7.2% by year-end,” added Kruger.
Salaries paid declined after five consecutive months of growth
Worryingly, the BTPI data shows less salaries were paid in September. Adjusted for weekly payments, BankservAfrica’s BTPI data suggests job losses occurred in September as the number of salaries paid declined after five consecutive months of growth between April and August 2022.
The economy has buckled under the pressure of higher load shedding levels, which has led to companies and employers experiencing ongoing hardship. Over and above the prolonged energy supply problems are the elevated input costs, rising interest rates and increasingly higher wage demands placing downward pressure on company profits and margins.
Furthermore, the less favourable global economic backdrop has amplified the economic challenges of many sectors.
Private pension slipped below R10 000 per month again
Meanwhile, the slight downward pressure was evident in the BankservAfrica Private Pensions Index (BPPI). The average nominal private pension slipped below R10 000 per month again, after three consecutive months above this level. Compared to a year earlier, the nominal pension was 5.5% higher in September, representing a moderation compared to the 8.5% growth in August.
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“In real terms, the average private pension also moderated further to R9 428 in September, 1.9% lower than a year earlier,” says Naidoo. Although September has been a weaker month for average pension payments, average real pensions have held up reasonably well in 2022 despite rising inflation, largely preserving the purchasing power of pensioners.