A new study revealed that take-home salaries in South Africa decreased by almost 35% in July compared to the same time in 2019.

The BankservAfrica’s Take-Home Pay and Private Pensions index provides insight into South African salary trends. Their latest release reveals South Africa’s take-home pay took a sizeable downswing in July 2020, and that a high number of individuals have not been paid a salary or wage throughout the lockdown period.

“We have observed large declines in the number of salary and wage payments that are routed through the National Payments System for processing by BankservAfrica,” says Shergeran Naidoo, Head of Stakeholder Engagements: BankservAfrica. “These generate estimations around the number of people receiving take-home pay. But the challenge for the BTPI is that there is no clear reason for the fewer payments.”

“The reduced number of payments may be the result of different reasons – some could be temporary, others could be for reasons that are not directly related to job losses,” explains Schüssler.  “But all in all, we believe that the impact on employment will only be seen in the coming months as the UIF TERS payments come to an end, some interim laid-off workers are re-employed and get their income back, and the economy normalises to a certain degree.”

“Some of the declines in the BTPI comes off a very high base in July 2019 where income increased by 12.6% year-on-year and rose by 7% annually in June,” explains Mike Schüssler, Chief Economist at economists.co.za.

“This follows from the South African national election in May where additional staff were employed in the run-up to the election and during the process. There was also the over time pay for police and the army in July and August. All of these contributed to an increase in the number of payments disbursed over that period. This high base resulted in larger than usual annual declines for the number of salaries and wages passing through payment distribution agents.”

It is possible that because of UIF TERS, there was an estimated 480 000 reduction in salary payments via the traditional payroll systems, due to the payments being made via different means. As monthly payments equalled only 2 406 000 payments, it seems that about 2.9-million people were paid out of a normal 3.3 to 3.6-million normal estimated monthly payroll payments, represented in the BankservAfrica Take-home Pay Index for July 2020.

“The combined private pensions and take-home pay, as measured by BankservAfrica, took a slide of 33.8%. This indicates that when government’s relief funds for individuals end, consumer spending may once again wane,” says Naidoo.

This is already somewhat evident in July 2020’s retail sales figures released by Stats SA, which declined by 9% on an annual basis and 1.1% from June 2020.

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