Thursday, May 24, 2018

This is the Average Take-home Pay in South Africa Right Now
Staff Writer
23 May 2018

BankservAfrica has released its latest Take-home Pay Index (formerly the Disposable Salary Index) for April 2018.

The Index is based on the average banked salary after taxes, pension funds and medical insurance that firms pay their workers electronically.

It found that despite a number of new tax increases (including a new 15% VAT rate) introduced by the 2018 budget in April, most middle and upper-class South Africans are earning slightly more.

South Africans earning below R432,300 per annum received relief from the revised personal income tax that came into effect at the beginning of April.

According to the Index, this amounted to a 1.5% salary increase above inflation in April.

“The average take-home salary was R14,681 in nominal terms for April 2018, representing a 5.8% increase on April 2017,” said Shergeran Naidoo, head of stakeholder engagements at BankservAfrica.

“In real terms, the average salary was R13,909 – 1.5% higher than a year ago. This is the seventh consecutive month of positive salary increases,” he added.

Mike Schüssler, Chief Economist at explained that although the personal tax revision was not the main driver of salary growth, it is still significant that for the first time in two years, the partial tax relief of 3.2% for those with an annual earning of below R432,000 has helped somewhat.

“The adjustment of the primary tax rebate helped the South African take-home pay increase slightly more. The personal tax relief in 2018 was far more than the 1% in the 2017 tax year and also slightly higher the 2016 tax relief,” said Schüssler.

However, he warned that the increases may not be as strong in the coming months with the public servants wage negotiations underway.

“In addition, the protracted wage talks suggest the implementation of the increases will be delayed, which will have a negative impact on the positive take-home pay trend in the coming months.”

Reflecting on April’s take-home pay, Schüssler believes the increases will be evident in the improved retail sales and overall spending during the month.

However, the VAT increases may also have a dampening effect. Furthermore, expectations of inflation trending upwards in the coming quarters may also see take-home pay increases slowing down.

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