Salaries will have to stretch further
If you earn a salary, you probably have less to spend than a year ago and, with weaker growth predicted, it looks like things will only get worse.
"All things considered, South African consumers will be increasingly under pressure as disposable salaries cannot keep up with the rising cost of living,'' said Mike Schussler from Economists.co.za at the launch of Bankserv Africa's Disposable Salary Index yesterday.
In June, disposable salaries - the amount paid into an employee's bank account after income tax, UIF and company deductions - grew by the least amount in nearly seven years.
In the month, salaried workers received 3.3% more than a year ago, but inflation was officially 5.5% over the same period, seriously eroding spending power.
The index is compiled from interbank payment data that represents an estimated 3 million salaried employees.
The average monthly disposable salary in June was R9724, according to the index. This is before payments for electricity, water and municipal rates, not to mention a mortgage.
With Eskom reportedly looking for tariff increases of between 14.6% and 19%, and other administered prices - those imposed by the authorities - climbing quicker than inflation, salaried workers could be squeezed even harder.
Not only are consumers under pressure, but the general economic environment is deteriorating.
The Reserve Bank's composite leading indicator declined for the third successive month, a pointer that economic growth will decline in the following 12 to 18 months.
In June Bankserv Africa's Economic Transaction Index also reached its worst level in a year.
"We are seeing the early indications of a rapid slowdown," said Schussler.
''The economy is not growing faster than our population.''
He said his own growth forecast of 2.4% might be optimistic.
The World Bank yesterday adjusted its growth forecast for South Africa this year downwards to 2.5%, echoing recent moves by National Treasury and the Reserve Bank (both expecting 2.7% down from 3.1% earlier).
Asad Alam, World Bank country director for South Africa, said yesterday: "South Africa is highly integrated with the global economy, and is therefore susceptible to the continuing slowdown in the eurozone countries and China, the two principal export destinations, for its goods and services."
According to the Bankserv Africa Disposable Salary Index:
The median monthly disposable salary is between R8000 and R9000. About 7.6% of salaried individuals earn this amount.
The biggest category, which accounts for about 12.7% of all employees, is the R10000 to R12000 bracket.
Only 20% of disposable salaries are above R14000 per month, while just over 25% of disposable salaries are below R5000 per month.
In June, the average monthly disposable salary was R9724.