BDSI - August 2015 - Take-home salaries increase, pensions top inflation
The average take-home pay crested R13 000 in July for the first time, and increases in take-home pay averaged 8% over the last twelve months, according to the BankservAfrica Disposable Salary Index (BDSI).
Despite the 5% inflation rate increase the average actual salary was R13 301 in July indicating that the last round of salary increases are still leaving the average employee better off, with data indicating that salaries paid into bank accounts are 2.9% above inflation over the last year. Formal sector employees who earn up to R100 000 per month are also seeing their salaries increase across the board.
“These numbers are being seen despite higher personal income tax rates and higher medical insurance deductions. This shows that a broad range of South African employees have seen positive real salary increases over the past 12 months, not just top management and professionals,” says Mike Schüssler, Chief Economist at Economists dotcoza.
The median salary increased by 6% since July 2014 to R9 751 per month - a percentage higher than the inflation rate recorded for July 2015.
For the first time since BankservAfrica started collecting take-home pay data, the share of people netting between R10 000 and R25 000 reached 36.6%. In total 46.1% of South Africans paid via the BankservAfrica payment system clear R10 000 or more.
The remaining 53.9% of employees receive less than R10000 per month.
While these only detail electronic payments, and exclude cash and intra bank payments, South African formal sector employees continue to beat inflation.
“The noted decline of 21% in the number of accounts which receive less than R4000 per month has been phenomenal. More than 80% of South African employees in the formal sector are now earning take home salaries that are above R4 000 per month,” says Dr Caroline Belrose, Head of Fraud and Data Analytics at BankservAfrica.
Pensions soar above inflation
Average and median pension payments to private pensioners increased by 9.1% to R5 854 and R3 357 per month respectively in July - 3.9% higher than inflation, a clear indication that, in the last year, private pensions have grown far faster than salaries.
“These figures show that pensioners have a much lower income, but that income is at least growing at a far better rate than before,” Schüssler said. “As pension pay outs are typically based on previous years’ asset performance and adjusted annually, this trend should continue at least until the end of the year.” The impact will largely be felt in the consumer space.
It is likely that the above inflation increases in both pensions and in disposable salaries will be positive for consumer spending, particularly retail sales as well as domestic travel as long as the petrol price remains relatively subdued.
Ends
Contact Wendy Fourie for more information: WendyF@bankservafrica.com or 011 497 4119.
Notes to the editor:
The BDSI data is smoothed on a three month moving average basis and adjusted for both weekly payments and pension payments. The average pension payments are only about 60% of those of people in employ, so the BDSI focuses on the employed and their salary payouts. We therefore adjusted the monthly numbers to take this into account. The average disposable salary is adjusted on a constant basis for these two factors. December is a very high payout month and somewhat distorts monthly averages, but we believe that the year-on-year trends remain intact.
Similar to the BankservAfrica Disposable Salary Index (BDSI), the Private Pension Index is an income gauge of money paid into bank accounts from pension schemes. While we do not know the exact number of people we do know the exact number of beneficiary accounts and this shows that there are about 633 000 monthly payments (for 2014 on average) going through the BankservAfrica system, which have been identified as pension payments.
This number does change slightly from month to month but out of the known universe of 740 000 private pension payments in 2012, it appears that the BankservAfrica payments system captures over 85% of the pension payment accounts. This indicates that the sample size of private pensions is extremely good via the BankservAfrica payment system.
We do not consider payments over R100 000 in size as these would typically be lump sum pay-outs of the amount that people can take out of their pension. These could also be pay-outs of the remaining pension in an account to family of a deceased. This remaining amount can often average well over R350 000 for each payment and as with the BDSI these payments do tend to distort the averages at certain times of the year. For 2014 these exclusions reduced the number of accounts considered from 633 000 to 628 000.
Payment analysis is conducted from the second of each month to the first of the following month inclusive as payment dates can vary when a month ends on a Sunday. A three month moving average is then calculated for trend analysis.
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 BPPI.