Disposable salaries, adjusted for inflation, declined in December. This is according to the latest BankservAfrica Disposable Salary Index (BDSI) data, which was published on Tuesday.
The survey notes a similar fall was experienced in the BankservAfrica Private Pension Index (BPPI), in which the December 2016 data reflected the first pension income decline.
“Real salary adjustments in December reflected the longest – and fastest – decline since the BankservAfrica BDSI data started in 2011. Furthermore, this is the seventh consecutive month in a row that salaries have fallen year on year in real terms,” says Dr Caroline Belrose, Head of Information Services at BankservAfrica.
On a year-on-year level, disposable salaries in December 2016 were lower than December 2015 and 2014.
The BDSI data is smoothed on a three month moving average basis and adjusted for both weekly payments and pension payments and is based on salary payments cleared by BankservAfrica.
The 1.5 percent decline is likely to impact consumers with income pressures resulting in reduced spend on major purchases such as cars, houses and furniture, says BankservAfrica.
“There is no doubt that most consumers were under pressure for most of 2016 and parts of 2015. The December BDSI suggests that this will continue in the first quarter 2017 as overall consumer expenditure is expected to remain subdued with lower than inflation salary increases likely to continue in the next few months,” says Mike Schüssler, chief economist at Economists dotcoza.
However, as 2017 increases will be based on higher inflation in 2016, the real declines should stabilise as soon as the annual salary increases are implemented around the March to April period, the company says.
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“Employees in the South African formal sector have certainly not had anything to cheer about in 2016 - the weak rand and drought had a devastating impact on real incomes and expenses of employees and their families,” says Schüssler.
The average employee received R14 102 in their bank account in December while the median was R10 397. Both of these are in nominal terms.
There was a silver lining in that there was a slight increase in the number of employees on the interbank payment system. This was 0.7percent higher than December 2015, BankservAfrica’s figures show.
Corresponding closely to the salaries data, private pensions showed real-term declines on a year-on-year basis.
The December BPPI showed a 1.7 percent year-on-year decline in real-terms.
For the past two years, pensions have seen their incomes increasing faster than employers. While the overall buying power of pensioners is still outpacing inflation, December’s data suggest the BPPI is starting to take strain from the stronger rand and the weakened equity market.