The new BankservAfrica Disposable Salary Index: Where the data comes from
The new BankservAfrica Disposable Salary Index (BDSI), launched by Africa’s largest automated clearing house today in Johannesburg, is ideally suited to provide the South African economy with detailed data on the amount of cash consumers take home every month.
The data presented in the index is obtained from more than a third of actual salary payments made in South Africa’s formal economy, explains Brad Gillis, CEO regulated business at BankservAfrica.
“Every day large companies, salary bureaus, remuneration companies, government and data centres send salary data for processing to banks. If the employee uses a different financial institution than his employer does, the data would normally go through BankservAfrica. This happens only when the transaction occurs between different banks and not within the same bank,” says Gillis.
The data received by BankservAfrica is defined as a salary, pension or wage payment. The ‘normal’ salary data is then extracted, resulting in between 4 million and 5.5 million transactions per month, with an average of more than 4.7 million per month over the last year. This number, however, does not reflect the full picture, as some salaries are paid weekly, whilst others may be bonus payments.
According to Mike Schüssler, chief economist at economists.co.za, the data is then analysed to present further detail by separating salaries and pensions, for example.
Moreover, regular salary payments are made on all days of the month. Weekly payments show a repeating pattern with approximately 160 000 payments on Fridays, close on 100 000 on Thursdays, and 80 000 payments on Mondays. Even Saturdays have 15 000 regular payments, bringing the total number of weekly payments to nearly 380 000.
There also seems to be a bi-weekly pattern of around 75 000 payments.
“We adjusted the weekly data to come up with one figure of what an individual would earn had they been paid on a monthly basis,” explains Schüssler.
Once this figure was added to those who were paid monthly, it was clear that the BankservAfrica data represented about three million people out of a formal work force of about 8.3 million, excluding agriculture, using the Quarterly Employment Survey from Statistics South Africa as a guide.
“We believe that most of these employees are full-time and that our sample size on full-time employees is probably slightly more than 36%. Part time employees are more likely to get cash-in-hand type payments,” Schüssler explains.
Variables in the data are explained by the fact that many companies pay bonuses in November / December, and by seasonal patterns. Fewer salaries seem to be paid in May and June, for example, and many companies employ extra workers over the December holiday season.
All social security payments, representing around 3.8 million payments of about R1 000 per month, have been removed from the data set.
Some caution on what the data represents – and what it does not
• These figures represent the formal sector, but may over-represent larger employers. Indications are that over 90% of large employers use BankservAfrica’s systems, but less than 30% of small employers do.
• The data is not a good indication of employment trends and should not be used for that. They reflect disposable salaries paid electronically via the South African banking system.
• Actual monthly estimates are within a 5% range and should not be seen as an absolute number, since we have insight of about 36% of the formal workforce.
• Our figures do change from month to month, but to smooth sometimes volatile data, the BankservAfrica Disposable Salary Index uses three-month moving averages.
• Whilst the figures have a close relationship to retail sales, retail figures are also influenced by interest rates, which may increase discretionary income as well as economic cycles and its effect on consumer borrowing in the South African economy.