The BankservAfrica Disposable Salary Index, launched this week, shows how much cash consumers take home each month and could offer valuable insight into this aspect of the economy.
BankservAfrica facilitates electronic salary payments on behalf of the banking sector and processes more than a third of all salaries paid in South Africa.
With data representing three million salaried employees – an estimated 36% of all formal, non-agricultural employees BankservAfrica said these statistics provided a "strikingly clear picture of South African consumers' disposable income and their behaviour".
The picture that has emerged is rather unsettling, because it shows that average disposable income is unable to keep up with inflation.
Bonuses and overtime
Disposable salaries – the income after tax, unemployment insurance fund contributions and company deductions have been made – grew at their lowest level since September 2005, at only 3.3% year on year, compared with 5.1% in May. The data also showed the median monthly disposable salary was between R8 000 and R9 000 and averaged between R14 000 and R15 000 before deductions.
Data on formal sector earnings provided by Statistics South Africa each year includes bonuses and overtime. The June 2011 Quarterly Employment Statistics survey reflected an annual increase of 5% in average monthly earnings paid to employees in the formal non-agricultural sector between May 2010 (an estimated R11 570) and May 2011 (an estimated R12 143).
Mike Schüssler, chief economist at economists.co.za, said the strongest expenditure sector in the economy had been the consumer.
"This growth is likely to slow unless the consumer borrows more," Schüssler said.
Apart from the United Kingdom, South Africa was the only country known to have this type of index, Schüssler told the Mail & Guardian.
"We think that we are faster than anyone else as our sample is about three million monthly earners and the data is available in a day or two after month end."
Up-to-date data about such a large section of South Africa's workforce could be invaluable for institutions such as the Reserve Bank, because it would indicate whether demand-side factors were playing a role in price increases, said Brad Gillis, chief executive of regulated business at BankservAfrica.
The data the clearing house receives is defined as a salary, pension or wage payment. The normal salary data is extracted, resulting in between four million and 5.5-million transactions a month. There has been an average of more than 4.7-million a month over the past year.
"The index highlights the difference between salaries and pensions, which can be helpful to policymakers and marketers," Gillis said. It showed that the average disposable (mainly private) pension was less than half the average disposable salary in June 2012, at R4018.
However, Bankserv warned that the data might rely too heavily on larger employers. "Indications are that more than 90% of large employers use BankservAfrica's systems, but fewer than 30% of small employers do," it said.
The figures change from month to month and, to smooth sometimes volatile data such as annual bonuses, the index uses three-month moving averages.