Slight upswing for salaries in February

Latest BankservAfrica salary data suggests job market is stabilising

Take-home pay tracked in the BankservAfrica Take-home Index (BTPI) showed a slight recovery in February 2023. The latest data on the number of salaries paid during the month also suggests the local job market is stabilising.

“The average nominal take-home pay rose to R15 186 in February, reaching the highest level since October 2022. However, it remains 1.8% below the R15 469 measured a year ago,” says Shergeran Naidoo, BankservAfrica’s Head of Stakeholder Engagements.

For many businesses, the economic situation remains challenging, with harsh load shedding, high manufacturing costs, higher loan rates, and decreasing demand all contributing to poor growth. Yet, according to the most recent BankservAfrica statistics, the labour market has stabilised.

After two months of significant drops in the number of wages sent into South African bank accounts, BankservAfrica’s data (adjusted for weekly payments) shows that a few jobs were created in February. “Though less than a thousand, stability in the job market is welcomed amid a challenging economic environment. The job market is still recovering from heavy losses that occurred due to the impact of the Covid-19 pandemic,” says independent economist Elize Kruger.

According to the December 2022 Quarterly Employment Statistics report, non-agricultural company employment amounted at 9.968 million at the end of 2022, down from 10.3 million in Q1 2020. The employment sector is clearly still playing catch-up, which remains a problem in light of South Africa’s low growth realities.

“With little indication of a notably different economic environment in 2023, but rather even lower economic growth forecasted for 2023 compared to 2022, the job market is likely to remain lacklustre. Furthermore, consumer inflation has been moderating rather slowly, resulting in the ongoing erosion of the purchasing power of households,” says Kruger. 

In 2022, consumer inflation hit a 13-year high of 6.9% (2009: 7.1%), and it is expected to average about 5.8% in 2023. Nonetheless, February’s headline and core inflation rates surprised to the upside, rising to 7.0% year on year and 5.2% year on year, respectively.

The data from BankservAfrica verifies the negative impact of inflation on earnings, with an 8.3% y/y decrease in the average actual take-home income in February 2023 compared to the previous year. This reality has resulted in lower household consumption expenditure and a significant drop in confidence levels, as reported in the recent FNB/BER Consumer Confidence Index (CCI), which fell to -23 index points in Q1 2023, indicating consumer concern about South Africa’s economic prospects and their household finances.

The BankservAfrica Private Pensions Index (BPPI) in nominal terms remained flat compared to the previous month at R10 054, 6.2% higher than a year earlier, and slightly above the monthly average in 2022, which realised at R9 985, according to Naidoo. In real terms, the average real private pension in February 2023 came to R9 473, marginally lower compared to a year earlier, signalling that the purchasing power of pensioners has largely been preserved amid the high inflation environment. The average nominal pension payment represents 66.2% of the average take-home pay in February 2023.