Take-home pay increased further in September, signalling 2023 could be a better year for salaries compared to the previous year, even as companies continue to face a rising operating cost environment, a survey has found.
BankservAfrica’s Take-home Pay index released Wednesday shows take-home pay increased to R15,673 in September, marginally higher than August’s R15,605 and 4.1% higher than a year earlier when they tracked at R15,056.
BankservAfrica’s head of stakeholder engagements Shergeran Naidoo said after having stabilised in the second quarter, nominal salaries increased notably in the three months ending September despite numerous ongoing economic challenges.
Naidoo said the index averaged at R15,610 in the third quarter, 6.8% higher than the second quarter average of R14,623, signalling that 2023 could well be a better year for salaries overall, compared to 2022.
Independent economist Elize Kruger said companies’ ability to pay inflation-related salary increases were hampered in the past 18 months, especially by a rising operating cost environment, indications of resilience have been encouraging.
“Industries have generally become more quick to recover from the effects of load-shedding, as companies reduce their energy dependence on the embattled Eskom,” Kruger said.
“If these somewhat better conditions in the private sector were sustained, it could be a supportive factor for employment and remuneration prospects in coming months.”
But annual growth in the average real take-home pay contracted in September, reflecting a sharp uptick in headline inflation.
The data shows real take-home pay at R14,239 in September, slightly lower than August’s R14,278.
“As expected, the sharp fuel price increases in early September pushed headline inflation to 5.4% in September, notably higher than August’s 4.8%,” Kruger said.
She said while there should be a partial reversal of recent fuel price increases in early November, headline inflation will remain in a range of 5% to 5.7% for the next nine to 12 months.
“Still, consumer inflation is forecast to average around 6% in 2023 compared to a 13-year high of 6.9% in 2022 and 2009’s 7.1%, and should then moderate further to average around 5.3% in 2024.”
She said while the interest rate cycle has probably plateaued, the SA Reserve Bank is acutely aware of the upside inflation risks posed by the renewed rand depreciation and higher fuel prices, among others.
“This will result in interest rates remaining elevated for some more months, with all other challenges remaining. With household finances already under severe pressure, this scenario remains negative for the spending ability and confidence levels of consumers,” she said.
Naidoo said the BankservAfrica data adjusted for weekly payments suggests a moderate pick up in the job market in the third quarter.
“According to the BankservAfrica sample, which represents about 25% of the labour market, 75,000 more salaries were paid in the third quarter,” Naidoo said.
“This is good news as it builds on some progress made in the second quarter with Stats SA’s recently released Quarterly Employment Survey indicating that 39,000 jobs were created in the non-agricultural formal sector in the second quarter, while its sister publication — the Labour Force Survey — also confirmed that 154,000 more people were employed in the formal, informal, agricultural and household sectors.”
Kruger added that while each new job opportunity should be celebrated, the stark reality is that SA’s population growth far exceeds its economic growth or job growth over the past number of years and as such the unemployment rate remains stubbornly high.
“At 32.6% in the second quarter, the official unemployment rate is one of the highest in the world. Of particular concern is the economy’s inability to provide jobs to its youth, with the unemployment rate for the age group between 15-24 years at a staggering 60.7% in the second quarter,” she said.
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