Bad news for pay hikes in South Africa

While the average South African salary has shown a recovery post-Covid, data shows pay hikes are now starting to slow down across the country, says financial services firm Alex Forbes.

Citing Statistics South Africa’s latest employment data, the firm noted that the annual growth in total gross earnings slowed to 6.7% in Q4 2021 from 9.7% y/y in the previous quarter, indicating a slowdown in momentum in income recovery.

Overall, incomes have risen by 4.6% above the pre-Covid-19 levels.

“Growth in compensation for employees is gradually losing momentum, slowing to 5.2% y/y in Q4 2021 from 7.6% y/y in the previous quarter, after jumping by 14.4% in Q2 2021.

“The recovery in incomes is broadly below Q4 2019 levels across sectors, with only the mining and manufacturing sectors rising by 6.7% and 0.5% above pre-pandemic levels, respectively,” the firm said.

The average monthly earnings in South Africa currently sits at R19,419.

In the foreseeable future, Alex Forbes said that it expects employment gains to remain modest, weighed by heightened uncertainty arising from the ongoing geopolitical tensions in Europe and its indirect links to the domestic output, as well as slowing global growth and the ongoing Covid-19 pandemic.

The official unemployment rate increased by a further 0.4 percentage points to a new record high of 35.3% in Q4 2021 from 34.9% in Q3 2021. The expanded definition of unemployment, which includes discouraged job seekers, decreased to 46.2% in Q2 2021, after increasing to 46.9% in the previous quarter.

The youth unemployment rate was unchanged at a record high of 66.5%, the highest rate among the G20 countries.

In the formal (non-agricultural) sector, employment increased by 223,800 in Q4 2021 after decreasing by 572,000 in the previous quarter, while 48,000 jobs have been lost in the informal sector.

Significant employment gains were recorded in the private households and trade sectors which increased by 128,700 and 118,000 jobs in the fourth quarter of 2021.

However, about 1.9 million jobs were lost between Q4 2019 and Q4 2021, reflective of the severe impact of the Covid-19 related lockdowns on economic activity.

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