Pay levels for South African employees have reached a historical low

New analysis on employee remuneration in South Africa by Big Four accounting and advisory firm PwC has revealed that overall pay levels in the country have dropped to their lowest point since records were first kept in 1971. The public sector is particularly hard hit by this scenario.

The firm released analysis earlier this year that evaluated the level of economic growth in the country, and indicated that expectations should be managed when it comes to growth in employee compensation in South Africa. Despite a degree of economic stability, the rate of of growth in employee remuneration levels appears to be slowing.

Now, the firm’s predictions have been backed up through new analysis of data released by the South African Reserve Bank. As per the new data, remuneration has dropped across the public and private sectors from 5.5% year-on-year in the third quarter of 2018 to 4.6% in the fourth quarter.

Consequently, there has been a dismal increase of just 4.6% in the nominal compensation for employees. As per PwC’s analysis, the public sector was particularly hard hit in this scenario. The data revealed that remuneration levels amongst the public sector halved between 2017 and last year.

Despite the decrease, however, the remuneration growth rate still remained above the inflation rate, although the effects of this were close to nothing for public sector employees in the transport, storage and communications sectors. According to PwC, the figures come amid a number of other poor economic indicators.

PwC Strategy& Chief Economist in Africa Lullu Krugel & Economist at PwC Strategy& Christie Viljoen have indicated that overall household expenditure has dipped considerably due to the dips in remuneration growth, in addition to overall productivity levels.

“Worker productivity was not on the agenda at President Cyril Ramaphosa’s State of the Nation Address (SONA) on June 20. The issue of slow productivity growth is important for the president’s drive to see retailers stock more locally produced products in order to support local supply chains and job creation,” wrote the PwC economists.