Formal sector salaries soar

Nompumelelo Magwaza

SOUTH Africans working in the formal sector experienced a substantial increase in their salaries in February, a 4.8 percent real growth since October.

This was according to the BankservAfrica Disposable Salary index released yesterday, which also suggested that without the inflation the growth reported in salaries for the month of February was 8.9 percent, with disposable salary increases outpacing inflation for six months in a row.

Caroline Belrose, the head of fraud and data analytics at BankservAfrica, said the index also showed that employed consumers were highly likely to continue spending as their disposable salaries allowed them to grow spending faster than inflation.

“This is driven by salary increases as well as a lower inflation rate of 3.9 percent for February which, in effect, also puts money back into people’s pockets,” Belrose added.

The index stood at R12 051 a month in February, up from R11 067 in the same period last year.

Mike Schussler, the chief economist at Economists.co.za, said: “While the number is slightly down due to normal seasonal trends from January, the fact that the index continues to beat inflation indicates that retail sales and other consumer items are likely to continue to see real increases as well.”

The index also stated that while there were no major strikes disrupting the data, one must remember that February last year was right in the middle of the platinum strike and average salaries could have been distorted due to this. “This means that some of the increase is slightly artificial but nonetheless has a positive impact on consumer spending,” the index said.

Schussler said this did not mean that there was enough money available, “but for people in formal sector jobs are still getting real salary increases if one looks at their disposable income”.

He added that it looked like those households were doing “okay”, however the fact of the matter was that it was still tough out there.

Schussler said employees had benefited from general annual salary increase, promotions and a drop in inflation. “However, one must remember that these employees or households’ disposable salaries still need to pay for water and lights, school fees, cars and maybe bond repayments. The discretionary salaries will then be spent on restaurants, clothing items or even a DVD or a CD.”

He said the pick-up in salaries indicated a good trend for retail sales growth. “In January, we had a 1.1 percent increase in real disposable salaries which translated to about a 1.7 percent increase in retail sales. Now we are at a 4.8 percent increase in disposable salaries but it does not mean that retail sales would grow at this rate, we are hoping for something between 2.5 and 3 percent increase,” he said.

The BankservAfrica Private Pension index, released in conjunction with the disposable salary index, showed that the average pension rose by 1 percent more than the average salary.

The index’s data indicated that the average pension deposited into private bank accounts in February was R5 557, an improvement of 9.8 percent over the last year and a 5.7 percent improvement in the average real disposable pension after taking inflation into account.

“While this is only 46.1 percent of the average take-home salary it does indicate that pensioners appear to be getting some benefits from the increase in equity prices over the last few years.”