The BankservAfrica Disposable Salary Index (BDSI) shows that inflation is catching up with the country’s formally employed workforce, who are earning little more than they did a year ago in real terms. The index reflects a 6.5% year-on-year increase in disposable salaries to R12 501 on average, marginally exceeding consumer price inflation (CPI) for March which was 6.3%.

BankservAfrica says the slowdown in disposable salary growth is also caused by a ‘bracket creep’ whereby, as salaries or pensions go up to compensate for inflation, people enter a higher tax bracket and therefore end up taking home the same amount.

According to Mike Schüssler, chief economist at Economists Dotcoza, South African consumers may be facing tougher times than they did in 2009 when the global financial crisis was in full swing.

“I don’t mean to be overly negative but it seems that even those people in jobs, that we would normally say are lucky, are now treading water,” says Schüssler, reflecting on February when salaries were up by 9.1% year-on-year. What is telling about that is that inflation was then at 7%, but real income growth in March was negligible, despite the drop in CPI. One can only imagine what the April figures will reflect, given the spate of price increases that we’ve had this month. “Inflation is starting to bite and everybody is feeling the effects. People want salary increases and employers are not giving them because they are also under pressure. The companies that are giving inflation-linked increases are basing them on last year’s CPI.”

However, Schüssler says those who have jobs should consider themselves lucky and that those who received an increase at all should be more thankful. Because, even if their increase was below inflation, at least they are less poor, or becoming poorer at a slower rate, than the next man. Solidarity recently announced that South Africa was in a ‘retrenchment crisis’, saying they were involved in 88 retrenchment processes where 58 549 jobs in various sectors of the economy were at risk.

Pensioners, on the other hand, are still beating inflation comfortably. The BankservAfrica Private Pensions Index was up by 7.4% for the year, with the average pension paid in March 2016 at R6 075.

Although the inflation-beating pensions are a surprise to him, Schüssler they are of little consequence in so far as the big picture in terms of what it means for South Africa’s economy. The retail sector, which he says has been surprisingly robust in recent years with growth rates of 3% to 4%, is bound to dip.

Says Schüssler: “There are many more people that earn salaries than those who get pensions, by far, and average pensions are less than half of average salaries so retail sales are going to slow down. So, looking at the whole picture, consumer spending is just not going to boost the economy as much as it has in the past.”