In one of the first concrete signs of the unemployment bloodbath due to the Covid-19 lockdown, data from the national payments system shows a decline of more than 13% in May in the number of people receiving salaries and wages in comparison with a year ago.
Data provided by Bankserv Africa measures the actual take-home pay, net of deductions including income tax and retirement savings contributions, and represents the actual amount transferred into employees’ bank accounts. The data does not measure transfers between employers and employees that use the same bank.
The unemployment rate reached a high of 30,1%, which translates to more than 7-million people seeking employment and struggling to get it.
The latest Bankserv data show that in addition to the number of people receiving salaries and wages declining from 3.15-million in May 2019 to 2.75-million last month (-13%), the overall compensation paid to workers after adjusting for inflation was 7% lower in May than the same month a year ago.
“This is a big indication that many people are losing their jobs and experiencing a reduction in income, and we are now striking the iceberg in terms of the jobs crisis which could see as many as one in five private-sector jobs at risk,” says Mike Schussler from Economists.co.za
Schussler says the data is skewed towards the remuneration of people working for larger companies and government as it is drawn from payments made through payroll systems.
As a result, it could be at risk of underreporting the extent of what is happening as payroll systems are perceived to be more widely adopted by larger corporates than small and medium-sized enterprises (SME’s) that might typically make payments via stand-alone EFTs and cash transfers.
Take-home pay is also more nuanced when analysed by income band, and reveals how disproportionately more severely lower-income workers have been affected by the crisis.
As an example, the number of people receiving less than R10,000 a month — which includes a large component of casual and weekly paid employees — fell by 13.4% in May year on year.
This contrasts sharply with the number of people taking home more than R40,000 a month, which comprises largely salaried, permanent employees, that increased by 8.1%.
“The people at the higher echelons are feeling relatively well off. They have received the benefits of the tax breaks provided in the budget speech and some of them have suspended provident and pension fund contributions. However, with the retrenchment notices being filed, one does suspect that monthly paid employees will also start to feel the impact,” says Schüssler.
On his calculation, one in five private-sector jobs are at risk based on his projection that 1.8-million jobs could be lost in the next few months in the private sector which employs 10.5-million people.
“Unemployment is a lagging indicator, and following the global financial crisis which started in November 2008 with the collapse of Lehmans, unemployment only peaked in SA more than a year later in the second quarter of 2010,” he says.
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