{"id":836160,"date":"2025-08-28T07:00:00","date_gmt":"2025-08-28T05:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=836160"},"modified":"2025-08-27T16:56:43","modified_gmt":"2025-08-27T14:56:43","slug":"hammer-blow-for-salaries-in-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/836160\/hammer-blow-for-salaries-in-south-africa\/","title":{"rendered":"Hammer blow to salaries in South Africa"},"content":{"rendered":"\n

South African salaries are under significant pressure, with data showing real take-home pay is steadily eroding and placing additional strain on households already battling rising costs and debt. <\/p>\n\n\n\n

Investec chief economist Annabel Bishop has noted the latest numbers point to a worrying trend that could have broader implications for consumer spending and economic growth.<\/p>\n\n\n\n

According to BankservAfrica\u2019s real take-home pay index, or BTPI, real incomes adjusted for inflation fell by 0.9% month-on-month in July after contracting by 4.6% in the second quarter of 2025. <\/p>\n\n\n\n

\u201cReal incomes have fallen persistently since March, correcting for the substantial 5.2% surge in January and a further lift in February,\u201d Bishop explained. From February to the end of July, real incomes declined by 7.1%.<\/p>\n\n\n\n

This means that real monthly incomes are now below December 2024\u2019s level, coming in at R14,660 in July and approaching October 2024\u2019s outcome of R14,608. <\/p>\n\n\n\n

Bishop pointed out that this drop coincides with weaker sales activity in the wholesale and motor trade sectors, which fell by 2.8% and 4.8% respectively over the same period.<\/p>\n\n\n\n

While the July figure represents a decline, the average real monthly income remains above last year\u2019s level, up 8.2% year-on-year. <\/p>\n\n\n\n

However, Bishop cautioned that this is misleading. \u201cThe pace of growth is slowing steadily, falling from 12.8% in January to 8.2% by July.\u201d <\/p>\n\n\n\n

BankservAfrica also noted that although incomes are still higher than a year ago, the moderation is concerning and likely to persist due to base effects and ongoing economic constraints.<\/p>\n\n\n\n

Additionally, actual nominal incomes, which are not adjusted for inflation, also fell by 1.1% in July and have declined every month since February, contracting by 4.6% in the second quarter. <\/p>\n\n\n\n

\u201cThe ongoing drop in both real and nominal incomes is concerning, as it weighs on household consumption and ultimately GDP,\u201d Bishop said.<\/p>\n\n\n\n

Growth expectations for the economy remain muted. Bloomberg\u2019s economic consensus shows GDP growth of just 0.4% quarter-on-quarter in the second and third quarters of this year, up slightly from 0.1% in the first quarter. <\/p>\n\n\n\n

\"\"<\/a><\/figure>\n\n\n\n

Economic growth on a knife’s edge <\/h2>\n\n\n\n

Bishop warned that without the boost from agricultural production earlier in the year, growth would have slipped into contraction. For 2025 as a whole, the consensus forecast remains at a modest 1.0% year-on-year.<\/p>\n\n\n\n

She stressed that the marked drop in real incomes is likely to have negative consequences for household consumption expenditure, which is a key driver of GDP. <\/p>\n\n\n\n

\u201cMonthly data for the second quarter is mixed, but the decline in real incomes has direct implications for consumer spending power,\u201d she said.<\/p>\n\n\n\n

Rising inflation since March has also eroded household earnings. BankservAfrica noted that shifts in salary structures, with additional salaries being paid at lower levels and losses at higher-income levels, could also help explain the depressed trend.<\/p>\n\n\n\n

Debt data paints an even bleaker picture. DebtBusters reports that 95% of South Africans who applied for debt counselling in the second quarter had a personal loan, while more than half also carried payday loans. <\/p>\n\n\n\n

\u201cAlthough recent interest rate reductions are welcome, high-interest personal loans continue to place consumers under severe pressure,\u201d said Bishop. On average, households now need 70% of their income to service debt, the highest level since 2017.<\/p>\n\n\n\n

For higher-income earners, the situation is just as worrying. Those taking home R35,000 or more are carrying unsecured debt levels that are 79% higher than in 2016. <\/p>\n\n\n\n

\u201cConsumers are still experiencing a notable degree of financial stress, with income growth significantly behind expense growth,\u201d she said.<\/p>\n\n\n\n

According to the latest debt index, the average pay packet today buys 49% less than it did nine years ago, once inflation is taken into account.<\/p>\n\n\n\n

The strain is also visible in retail and trade sentiment. The Bureau for Economic Research (BER) retail trade survey showed retailer confidence fell by 8% in the second quarter, with 58% of retailers dissatisfied with operating conditions. <\/p>\n\n\n\n

\u201cThe decline over two consecutive quarters suggests a moderation in retail sales growth, particularly as spending linked to two-pot retirement withdrawals winds down,\u201d Bishop noted. <\/p>\n\n\n\n

Sales and order volumes have deteriorated, with durable goods retailers\u2014particularly in hardware\u2014reporting weaker confidence. Semi-durable retailers started the year on a high but have also pulled back amid a deteriorating macroeconomic outlook.<\/p>\n\n\n\n

For Bishop, these signals confirm that household spending will remain constrained in the months ahead, keeping overall growth subdued. <\/p>\n\n\n\n

\u201cMixed data indicates GDP growth of around 0.5% quarter-on-quarter for the second quarter, which is hardly enough to suggest a meaningful recovery,\u201d she said.<\/p>\n","protected":false},"excerpt":{"rendered":"

Investec’s chief economist has noted that salaries are dropping in South Africa, and this is bad news for households and the economy. <\/p>\n","protected":false},"author":92,"featured_media":656761,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[12671,1498,1439,853],"class_list":["post-836160","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-bankserv-africa","tag-investec","tag-salaries","tag-south-africa"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/836160","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/92"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=836160"}],"version-history":[{"count":3,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/836160\/revisions"}],"predecessor-version":[{"id":836164,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/836160\/revisions\/836164"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/656761"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=836160"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=836160"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=836160"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}