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<\/a><\/figure><\/div>\n\n\nWhere to next for salaries<\/h2>\n\n\n\n
The South African Reserve Bank (SARB) recently announced that it preferred to see consumer inflation anchored around the lower end of the current 3%-6% target band.\u00a0<\/p>\n\n\n\n
The SARB and National Treasury are currently working on creating a new inflation targeting framework, with National Treasury agreeing that the current range is too wide. <\/p>\n\n\n\n
It remains to be seen what would be needed to steer the economy towards such a low inflation environment. <\/p>\n\n\n\n
\u201cOne aspect that could potentially be a near-term hurdle is the fact that trade unions and the business sector still believe that inflation will average around 4.3% in the next five years,\u201d said Kruger.<\/p>\n\n\n\n
In recent years, many wage agreements have been extended to three- or five-year terms, often resulting in higher pay levels compared to today\u2019s low inflation environment. <\/p>\n\n\n\n
\u201cWhile adjusting to a lower inflation environment will be challenging and take time, recent data show early signs of moderating inflation expectations and salary adjustments becoming more aligned with this trend.\u201d <\/p>\n\n\n\n
This includes the recent Motor Industry Bargaining Council\u2019s three-year agreement, which grants employees a 6% increase in the first year in 2026, followed by 5% in subsequent years.\u00a0<\/p>\n\n\n\n
In automotive retail, workers will receive 5% annual increases over three years, while petrol attendants will see 6%, 5%, and 4% increases, plus a 1% annual medical insurance allowance. <\/p>\n\n\n\n
\u201cFor 2025, industry indications suggest an average salary increase of around 5.3%, compared to a forecast inflation rate of 3.3%. While this could boost spending, it will only be sustainable if productivity growth keeps pace,\u201d ends Kruger.<\/p>\n\n\n