For the first time this year, the September data of the BankservAfrica Disposable Salary Index (BDSI) shows a decline on average disposable salary in real terms on a year-on-year basis by 0.3%. The median disposable salary declined by 0.7% in the first nine months of 2016 compared to the same period in 2015.
The data supports Statistics South Africa’s declining retail sales figures in August where big ticket items, such as passenger cars, did not feature. “Salaried individuals have for some time been paying off their debts and are subsequently purchasing less durable goods such as cars and houses,” explains Mike Schüssler, Chief Economist at Economists dotcoza.
Although real average disposable salaries rose by 4% over a four-year period, these increases are still declining in nature.
According to Schüssler, the current trends suggest that any disposable salary increases for the remaining 2016 months will not be strong due to the higher rate of inflation and weak economic growth.
“This is the first time in the BDSI’s records that salaries have declined over a long period of time – and supports the growing sentiment that salaries are unlikely to beat inflation in 2016,” according to Dr Caroline Belrose, Head of Knowledge and Risk Services at BankservAfrica.
The rising pension payment trend continues
Private banked pensions are increasing at a very fast rate, according to the September BankservAfrica Private Pension Index data (BPPI).
In the nine months to September, the average pension increased by 1.8% year-on-year, according to Dr Belrose. “As indicated in August’s BPPI, average pensions is the only income to be growing in real terms and helping to keep retail sales in positive territory,” she explains.
However, although average pension is increasing, it still falls below the typical median pension that reflects year-on-year increases of 6.8% for the nine months to September this year.
“Median pensioners have therefore experienced pension increases at twice the rate of inflation. This is a truly astounding trend analysed by the BankservAfrica payment system,” says Schüssler.
Since January 2013, when the BPPI data analysis began, the typical pensioner experienced real increases of 15.2%. The typical pension value has increased from 38.5% in January 2013 to 43.5% in September 2016 when compared to the typical salary.
“BankservAfrica’s BPPI data reveals a complete reversal to when salary percentage increases were in the lead,” says Schüssler.
Since January 2015, there has not been a month where the increase in the typical pension has been less than the typical salary. The average income from pension fund investments has been astounding over the last few years.
“The aging population and the performance of pension assets are certainly having a positive impact on the overall buying power of older South Africans. It is here that the weaker currency has shown more favourable results for the South African economy,” says Schüssler.
Total disposable salary payments from January 2013 increased by 27.4% in nominal terms while the total pension payments increased by 37.6% over the same period.