BDSI-BPPI November 2015 - Take-home pay suffers a real decline

Take-home pay suffers a real decline. Take-home pay as measured by the BankservAfrica Disposable Salary Index suffered a decline after taking inflation into account. Nominally the increase was 2.5% in October 2015 over October in 2014. That means when inflation of 4.7% is taken into account there was a decline of 2.1% in the formal sector salaries paid into people’s bank accounts.

This is only the 2nd time this year that disposable salaries have declined after inflation is taken into account. Overall however, this year has been good to employees in the formal sector and this is somewhat unusual over the last four years of disposable salary data that is available. 

There are some unusual and unfortunate reasons for the low increase.

 In part, this is due to the high number obtained in October 2014 as back pay from wage adjustment’s was made in October to the metal industry and some others which resulted in a very high increase in that month - meaning that the base for the measurement is unusually high. 

 But weak economic conditions may also be having an impact as the salary of the person in the middle or typical salary also had a smaller than usual increase of 4.9% or just 0.3% above the inflation rate for October on a year ago. 

The average salary was R12 840 in October. This indicates that the average salary also declined on a month ago by R150 and is perhaps partly a reflection that many people are not able to earn the extras in their salary such as overtime, work related bonuses or making targets for extra commissions. 

 Also the back payments of local government salaries are also now out of the system so in a sense the “normalisation” of salaries is continuing. Without any major strikes in the past few months it is expected that the salary base is now “normal” and therefore there should not be too many exceptions in the data for the next few months which will make comparisons much easier.

 Despite this, the number of people earning well continues to grow fast.

 Interestingly, the number of employees receiving over R50 000 in their bank accounts has more than doubled from 22 305 on average for the three months to October 2011 to 50 524 in the three months to October 2015 (Excluding those earning over R100 000 plus a month).

 The number of people taking home between R50 000 and R100 000 has increased from 0.8% to 1.6% of the total number of people receiving salaries of under R100 000 per month. While this is only take-home pay as paid via the South African Payment system, it shows that despite income tax increases as well as “bracket creep” along with above inflation medical insurance increases the number of people taking home over R600 000 per year has doubled. 

Similarly, the number of people who take home over R300 000 but less than R600 000 per year has increased from 5% of the total to 8.4% of the total number of earners. Those taking home between R120 000 and R300 000 has increased from 26% to 38.4%. 

 Those with a disposable income between R120 000 and R1 200 000 per year has increased from 31.7% of the total in October 2011 to 48.4% in October 2015. In numbers this represents a 61% increase in four years and far exceeds inflation.

 This obliviously has resulted in higher tax collections as well as higher retail sales and explains why the upmarket retail figures continue to do well. The increase in the number of people earning over R120 000 indicates that despite slow economic growth the upper middle class is still increasing its ranks fairly well.

 That at least is good news after the slew of bad news in recent months. 

Pension increases still beat inflation. 

In contrast to the salaries, pensions continued to increase well above the inflation rate in October 2015. The average disposable private pension was 9% up on a year ago and the same as in September 2015. 

The average pension was R5 946 in October compared to R5 947 in September. The average private pensions increased with 4.2% in real terms. The pensioner in the middle or the typical pension increased with 9.3% in nominal terms to R3 957 per month. 

Source: BankservAfrica and Economists dotcoza  

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BETI - November 2015 - SA economy slightly healthier, but still in decline

Press release: For immediate release Date: 11 November 2015

SA economy shows signs of health despite decline October BETI records R719.5 billion in transactions, 6.5% higher than 2014

October saw a higher number of payment system transactions under R5 million than those recorded in September, according to the BankservAfrica Economic Transaction Index (BETI) which measures these transactions.

 Despite the month-on-month upturn, the quarterly changes still show a shrinking economy, although less so than in September. 

 Regardless of five monthly declines in 2015 so far, the index has remained positive on where it was a year ago, mainly due to a strong end to 2014 and a strong February early in 2015. 

 The real value of economic transactions in the economy continues to show an increase, however the year-on-year increase has declined in line with the months of negative growth that slowed the positive annual trend. 

 Nonetheless, the BETI shows at least a small break from the negative declines, providing a very welcome month of positive data that gives the fourth quarter an improved outlook. 

 “Overall, the transaction volumes are indicative of a very weak economy that is not experiencing significant growth,” says Mike Schüssler, Chief Economist at Economists dotcoza. “October is the first month with a positive increase in the last four months, and only the second increase in the last six months on a month-on-month comparison. This indicates that concerning economic conditions remain, but that the economy is showing a degree of resilience.”

 However, for the third month in a row the actual number of transactions declined

 “Overall the transaction volumes declined by 0.7% when compared to a year ago, while the actual transaction values have increased. This is the third consecutive month of declines when compared to this time last year,” says Dr Caroline Belrose, Head of Fraud and Data Analytics at BankservAfrica

. “Generally the BETI has grown faster than inflation over the last year, but not by much. The standardised BETI recorded a value of R719.5 billion, which was 6.5% higher on a year ago. The standardised value adjusts for the number of weekdays and weekends which has an impact on the actual BETI.

 Ends Contact Wendy Fourie for more information: wendyf@bankservafrica.com or (011) 497 4119

. Notes to the Editor:

 The BETI stands for the BankservAfrica Economic Transaction Index. BankservAfrica is a payment enabling organisation operating between the various South African banks with a very secure messaging environment in place. Economists dotcoza is an economic consultancy that helped develop the BETI.

 The BETI is a very fast and broad overview of current economic trends over a broad range of sectors, making use of economic transactions as captured by BankservAfrica. Like the Swift Index, the BETI is considered a “now-cast” number as a result of its speedy ability to convey the overall economic conditions to the market. Where most economic indicators can take anything between 38 and 76 days to become public knowledge, now-cast indicators take less than a month after the facts were revealed to come to the market. 

 The BETI is also the broadest of the “now-cast” indicators to come to the market, as it covers economic transactions across the whole economy. Very big distortive economic transactions do not form part of the BETI. This is also on its own a trend-strengthening indicative factor. BankservAfrica is a payment enabling organisation which sits between the various South African banks. The organisation has a very secure messaging environment in place.    

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