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South Africa’s wages improved 3% year-on-year in real terms in October 2020, according to BankservAfrica’s latest Home Pay Index (BTPI).
“With the Covid-19 FIU TER payments ending in September 2020 and the number of employees left far fewer than before for the October 2020 extended applications, the BTPI is in a better position to measure the actual number of wages paid, “said BankservAfrica’s head of stakeholder engagement Shergeran Naidoo.
Average net salary was recorded at R14,773 in nominal terms in October 2020, representing a 5% monthly change from September 2020.
However, the annual comparison of the number of salaries paid continued to decline.
“There was a 10.4% decrease between October 2020 and October 2019. This is deeper than what our data showed in September, but much less than the 34% experienced in July 2020,” Naidoo said.
In real terms, taking inflation into account, the net salary was recorded at R12,760 in October, compared to R12,042 in September.
Impact of Covid-19
According to BTPI data, the most affected income earners during the Covid-19 pandemic were those who took home R30,000 or less.
“At the beginning of the Covid-19 shutdown, daily and weekly workers were the hardest hit with wage numbers falling to extremely low levels,” said Mike Schüssler, chief economist at economists.co.za. “This is similar to what is being experienced around the world, where people with the lowest incomes were hit the hardest.”
July and June showed the biggest drops in wages paid compared to April, which showed the smallest drops. This is because employee payments and employment figures have delayed economic events by about a month. To this are added the payrolls, which are predefined for one or two months.
“The worst economic figures were recorded in April, but the worst salary figures were reflected in July, three months later,” said Schüssler.
Although payments from the FIU were not included in the figures, the BTPI showed that employment in the formal sector was negatively affected during the crisis. This has improved since then, but a full recovery is not expected for some time.
“The increase in the average take-home salary, despite the decrease in the number of salaries, resulted in a decrease in total salaries of 0.1% in nominal terms in October 2020,” said Schüssler.
“The few remaining TERS payments can help consumer spending. But, when these and the additional SASSA payments cease, we may see the real damage of the pandemic to our economy, through wages.
“It appears that as the economy stabilizes after the turmoil of the lockdown, the real damage to personal income is starting to emerge,” he said.
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