BDSI November 2014 - Considerable rise in take-home pay of formal employees

Press release: For immediate release

Date: 27 November 2014

Considerable rise in take-home pay of formal employees – BankservAfrica Index

Year-on-year, formal sector employees' salaries have increased by 5% more than inflation in October, clocking in at an astounding 11.2% more. This is according to the latest BankservAfrica Disposable Salary Index (BDSI)

“Once again, the theme of those in work being able to maintain increases in their lifestyle is borne out, as both private and public sector employees take home more after taxes, pensions, medical insurance as well as garnishee orders and firm-deducted micro loans,” explains Dr Caroline Belrose, Head of Fraud and Data Analytics at BankservAfrica.

The average real increase in take-home pay is 2.5% overall for the whole of the last 12 months, which is still significantly higher than inflation.

Salary trends 

According to the BDSI, the increases are lifting people out of the lower disposable salary bands, as the number of people earning less than R4 000 per month in disposable income has declined to less than 19% for the first time in the history of the BDSI

 This may also partly be due to the reduction in garnishee orders over the last few years as well as consumers becoming more wary of micro loans. Of course, higher salaries must also form part of the equation.

 “The most interesting aspect this month, however, is that the number of people who received between R10 000 and R25 000 was the biggest single grouping of people in the BDSI,” says Belrose.

 “The data shows that just over 1.1 million employees received a disposable salary between R10 000 and R25 000 per month, which is just a touch more than the 1.08 million who received between R4 000 and R10 000 per month.

” This trend is likely to continue in the future as the percentage of those getting more than R10 000 in their bank account now accounts for 46.2% of the total sample of the BDSI. This is up from 38.9% of employees taking home R10 000 or more in October 2013. 

The number of people earning more than R10 000 increased by 15.9% while the top category of those earning between R50 000 and R100 000 saw the number of people increase by 25.7%

 The two lower categories saw a decline in number of earners. The fastest decline – being an absolute decline of 16.2% – is for those earning less than R4 000 in take home pay. Those taking home between R4 000 and R10 000 declined by 3% over the last year. 

High average salaries for those with formal jobs

 “With most of the strikes now behind us, the increases in the formal sector are once again quite astounding,” says Mike Schüssler, Chief Economist at economists dotcoza.

 The average salary being banked is R12 542 per month in the South African formal sector payments system. This is the sixth month in which the average disposable salary is above R12 000 per month.

 He estimates that there were about 2 907 725 account holders receiving formal salary payments through BankservAfrica in October.

 According to Schüssler, we may experience better than expected retail sales this Christmas season if salary increases remain as they have been in the last few months

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

 Note to the editor:

 Take home or disposable salary is the amount paid via the BankservAfrica system that indicates it is a salary payment and would already have taxes, UIF, Pension and medical insurance deducted. Other deductions according to payment firms and payment offices are Garnishee orders, up-front payments and deductions by some lenders such as the old Iscor Employee fund. Other deductions are much smaller in numbers but can from time to time be big amounts such as SARS penalties. We estimate weekly salaries to be about 9,5% of the total people or about 30% of actual payments. 

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