Average South African take-home pay falls almost 5% on annual basis in December

25 Jan 2023

South Africans in December 2022 took home less money than they did the year before, according to the BankservAfrica Take-Home Pay Index (BTPI). This is one of many signs of our tough economic times.

BankservAfrica, the largest automated payments clearing house in Africa, said average nominal take-home pay in South Africa was 4.8% lower in December 2022 than the previous year, amounting to R14,663.

“2022 turned out to be an exceptionally challenging year for the economy, with the rising cost of living, higher interest rates and the worst year ever of load shedding being the main obstacles to growth. Cumulatively, these headwinds kept a lid on salary increases,” it said.

This comes against the backdrop of rising inflation, which averaged 6.9% in 2022, its highest level since 2009.

Read more in Daily Maverick: “SA December CPI slows to 7.2% while November retail sales rise modestly”

“For 2022 overall, the average nominal take-home pay amounted to R15,055 per month vs R15,166 in 2021,” BankservAfrica said.

So wages and salaries stagnated while inflation accelerated, pointing to a general fall in household incomes.

“BankservAfrica’s data ... reflected a 6.9% y/y decline in the real average salary recorded in 2022, compared with 2021. This reflects a notable erosion of South Africans' purchasing power, a trend that filtered through to lacklustre consumption expenditure by households in 2022,” it said.

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This highlights the “cost-of-living crisis” and could, among other things, fuel wage demands over the next couple of years. Companies and industries that have long-term wage agreements in place, such as the platinum mining sector, will breathe a collective sigh of relief.

“On a more positive note, despite the economic challenges of 2022, employment levels increased notably, though still playing catch-up with job losses that occurred due to the impact of the Covid-19 pandemic.

“Adjusted for weekly payments, BankservAfrica’s data suggest that 1.072 million more salaries were paid into South Africans’ bank accounts in 2022 compared with the previous year,” BankservAfrica said.

“A phenomenon noted throughout 2022 (and reflected in December’s data) is that there was often an inverse correlation between the number of salaries paid and average value of salaries (take-home pay), suggesting that the bulk of the new opportunities were likely created in the lower-income categories, which in December probably ties in with the demand for temporary and seasonal workers in the festive season.”

Pensions bucked the trend of real declining wages. In nominal terms, the BankservAfrica Private Pensions Index finished 2022 at R10,016, a 7.2% rise at the end of 2021. So pensioners, at least, did not feel as much of a sting.

Still, the bottom line is wage and salary stagnation and decline, which means South Africans are generally getting poorer.

These trends will exacerbate already glaring income disparities and levels of inequality, raising the prospects of social unrest at a time when Eskom’s woes have almost every South African seeing red.

At least inflation is expected to maintain its gradual slowdown this year, and the central bank should be nearing the peak of its hiking cycle.

But the overall picture remains pretty grim. DM/BM

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