Salary earners in South Africa have seen a drop in their inflation adjusted salaries for a seventh straight month in December, the latest BankservAfrica Disposable Salary Index (BDSI) released on Tuesday showed.

According to Dr Caroline Belrose, head of information services at BankservAfrica, the weak rand and drought had a devastating impact on real incomes of employees and their families as inflation hurt consumers’ pockets.

On a year-on-year level, disposable salaries in December 2016 were lower than in December 2015 and 2014.

However, the December 2016 salary level was partly due to smaller year-end bonus pay-outs and the rate of salary adjusted increases growing slower than the rise of consumer prices.

The BDSI report cautions that the 1.5% year-on-year decline is likely to impact consumers in the months to come. Domestic consumers under this sort of income pressure are less likely to make major purchases such as cars, houses and furniture.

In nominal terms, the average employee received R14 102 in their bank account in December, while the median was R10 397.

Real salary adjustments in December reflected the longest and fastest decline since the BDSI data started in 2011. According to the BDSI report, these declines are partly due to salary adjustments linked to the previous year’s inflation.

"These adjustments were lower in 2016. The tough economic conditions added further pressure," according to the report.

"There is no doubt that most consumers were under pressure for most of 2016 and parts of 2015. The December BDSI suggests that this will continue in the first quarter of 2017 as overall consumer expenditure is expected to remain subdued with lower than inflation salaries likely to continue in the next few months," said Mike Schüssler, chief economist at Economists dotcoza.  

"However, as 2017 increases will be based on higher inflation in 2016, the real declines should disappear as soon as the annual salary increases are implemented from March or April and the months that follow."

One positive finding in the latest report is that there was a slight increase in the number of employees on the payment system - 0.7% higher than December 2015.

Pensions

The BankservAfrica Private Pension Index (BPPI) for December 2016 reflected the first pension income decline.
 
“The December BPPI showed a 1.7% year-on-year decline in real terms,” Belrose said. 
 
For the past two years, pensions have seen their incomes increasing faster than employers. While the overall buying power of pensioners is still outpacing inflation, December’s data suggest the BPPI is starting to take strain from the stronger rand and the weakened equity market.