Big win for salaries in South Africa
While South African households remain under financial pressure, 2024 at least saw salary earners do better than the year before, with pay increasing in both nominal and real terms—and the same is expected for next year.
Data published by Stats SA shows that the average nominal salary in South Africa is currently sitting at R28,220 per month. This is R2,134 more than the same time last year (R26,086) – or an increase of 8.2%.
Stats from BankservAfrica, meanwhile, show that the average take-home salary in South Africa is currently sitting at R16,895, up 9.1% from the R15,485 recorded at the same time in 2023.
Adjusted for inflation, both these figures still show real growth of around 3% for the year.
This is much higher than anticipated, with many analysts and corporate surveys in 2023 pointing to expectations of only around 6% salary hikes in 2024 (around 1% in real terms).
This bodes well for salaries in 2025, where the South African Reward Association expects an average 6% salary hike once again – but this time with inflation way down, boosting purchasing power.
Salaries in South Africa have been under severe pressure for the last few years due to extremely high inflation and weak economic growth.
Data from the Bureau for Economic Research showed that salaries and wages increased by 3.8% in 2022 and 4.6% in 2023, while inflation averaged 6.9% and 5.9%, respectively.
This resulted in a cumulative decline in consumer buying power of 4.6% during that period.
2024 staged a significant turnaround in fortunes for households, however.
Starting off the year on the back foot with still-high levels of inflation and interest rates stuck in restrictive territory, the economy has shifted. Now, it ends the year with inflation below the South African Reserve Bank’s target range of 3% to 6%, surprising markets in December.
Interest rates, meanwhile, have been cut by 50 basis points since September, with more cuts expected in the new year.
This has lifted household purchasing power, and is expected to continue to do so in 2025 and into 2026.
At the same time, South Africa’s economic growth is also expected to improve, pushing towards 2%.
However, the good news does come with a caveat and a call to temper expectations amid rising uncertainty.
While South Africa’s economy growth is expected to improve, the latest GDP figures for the third quarter of the year—where the country saw a decline of 0.3% amid expectations of growth—show that industries are still struggling to shake off the last few years.
With weaker-than-expected growth on the cards for 2024—perhaps not even passing 1%—companies are likely to proceed with caution.
On the inflation front, recent shifts in global politics, such as an incoming Trump presidency, may put markets under pressure, particularly around trade and oil. This could see inflation rising and eating away at disposable income.
Nevertheless, even with upside risks to consider, it is evident that South African households are ending the year on surer footing in terms of salaries and disposable income, which economists believe should continue through into 2025.
Loading ...
