Real Salaries decreased by 2.5% compared to 2015, Inflation stable at 5.9%

For the first eight months this year, real take-home salaries in South Africa declined by -0.4%, according to the latest BankservAfrica Disposable Salary Index (BDSI).

Year-on-year real disposable salaries declined in August for the third consecutive month and for the fifth time in 2016, with employees taking home -2.5% less due to increased inflation. “While workers received salary increases in nominal terms, the real value for these ended up being lower due to the higher rate of inflation,” explained Dr Caroline Belrose, head of knowledge and risk services at BankservAfrica. Typical “inflation plus” salary increases are effectively not beating this year’s inflation and the BDSI could end up showing a real decline in salaries for the entire year, should the current trend hold.

Inflation averaged at 4.6% in 2015 compared to the current 5.9%. Above inflation increases on medical insurance and real personal income tax furthermore contributed to the growing gap between gross and net salaries.

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