Decline in take-home pay suffers real decline

Last month there was a noticeable decline in the take-home pay as measured by the BDSI.

The BankservAfrica Disposable Salary Index (BDSI), suffered a decline of 2.1% in October 2015, after taking inflation into account. With inflation at 4.7%, the nominal increase of 2.5% in October 2015 over October in 2014 means that there was a decline of 2.1% in the formal sector salaries, as paid into people’s bank accounts.

Considering the last four years of disposable salary data that is available this is an unusual occurrence, as this is only the 2nd time this year that disposable salaries have declined after inflation is taken into account.

Unusual and unfortunate reasons for low increase

Higher than usual payments obtained in October 2014 as back pay from wage adjustments â€" for example with the metal industry - is partly responsible for this discrepancy, meaning that the base for the measurement is unusually high.

But weak economic conditions may also be having an impact as the salary of the person in the middle (also referred to as the ‘typical salary’) also had a smaller than usual increase of 4.9% or just 0.3% above the inflation rate for October when compared to last year.

The average salary was R12 840 in October, indicating a decline of R150 compared to last month. This is likely a reflection that many people are not able to earn the extras in their salary such as overtime, work related bonuses or making targets for extra commissions.

Another consideration is that the back payments of local government salaries are now out of the system so there is a normalisation of salaries, and therefore no exceptions in the data are anticipated for the next few months.

Click on below link to download BDSI Report for Dec 2015:
BDSI Report Dec 2015.docx - 72.3 KB