March take-home pay boosted by bonus payouts – BankservAfrica

The average take home pay of South African employees increased to the second highest point in seven years in March, the BankservAfrica Take-Home Pay Index shows.

It was, however, bonuses that were paid out to high earners during the month that contributed to the high increase in average take-home pay.

The average real take-home salary was recorded at R14 500 in March, while the average take-home pay without adjusting for inflation reached a new high of R15 812.  

Sheregan Naidoo, head of stakeholder engagements at BankservAfrica, says the increase is significant but was hardly felt by the typical employee, who is defined as one earnings a take home pay where 50% earns less and 50% earns more.

The typical take-home pay was just above R10 043 in March – the lowest recording since April 2018. Accordingly, it was 1.3% less after adjusting for inflation on a year-on-year basis.

The disparity between the two averages can be attributed to the bonuses paid to high earners during March, which is one of the main ‘bonus’ months in South Africa. 

“It appears March was a greater performance-based pay month than usual for many of the high earners,” BanservAfrica notes. “March salaries often include performance payments as companies who have their year-end in December reward senior and mid level staff in that month based on the company’s performance.”

In addition to the bonuses being paid, Naidoo says there was a 15% increase in people who banked more than R40 000 in March on a year-on-year basis, while those earning less than R12 000 but more than R6000 on a monthly basis, dropped by 6%.

“The number of ‘high earners’ with monthly incomes between R40 000 – R100 000 increased substantially between 2017 and 2018, which augmented the value of the average take-home pay in March,” says Mike Schüssler, chief economist at Economics.co.za.

Therefore the typical earner received just 69.3% of the pie in March.

According to Schüssler, March was a major outlier as far as data between 2012 and 2019 is measured because, the real average take-home pay increased by 5.3% and the typical take-home pay increased by 3.7% in real terms, making the case that the average rises faster due to those earning more getting higher increases. 

“Therefore, in some months like March, the average employee is doing better than the typical employee in the middle of the income spectrum. But in most months, the typical employee’s actual take-home pay is 0.2% better than the average employee’s,” says Schüssler.

Schüssler says that the tiny difference suggests that the typical employee is therefore doing a little better as take-home pay increases.

Source: moneyweb.co.za