SA salary earners saw further gains in purchasing power in February as real take-home pay continued its upward trajectory, reaching the highest level in three years, according to the latest BankservAfrica Take-home Pay Index (BTPI).
The average real take-home pay — adjusted for inflation — rose 10.7% year on year to R15,799, up from R15,665 in January.
This follows a robust 12.8% increase recorded the previous month and underscores the benefits of a low-inflation environment that has prevailed since mid-2024.
Nominal take-home pay rose only marginally — from R18,141 in January to R18,241 in February — but remained well above the R15,983 recorded in February 2024.
Independent economist Elize Kruger said the strong rise in real earnings was largely thanks to sharply moderating inflation. The average consumer inflation rate was forecast at 3.6% for 2025, the lowest since 2020.
“This is much needed as salary earners remain under pressure due to the soaring cost of living, high interest rates and additional taxes — namely the higher VAT rate and no adjustment to tax brackets as announced in the 2025 National Budget,” Kruger said.
These fiscal policy shifts, particularly the VAT hike, have dampened consumer confidence, which slumped notably in the first quarter despite the improvement in earnings, the BankServ statement stated.
One reason wages have remained steady this year is the growing number of multiyear wage agreements between employers and unions in both the public and private sectors.
Mining giants such as Harmony Gold, Amplats, Implats, De Beers and Sibanye-Stillwater are now in the second or third year of five-year deals delivering average increases of about 6%, well above the projected consumer price index rate.
In the public sector, the SA Local Government Association (Salga) signed a five-year wage pact in late 2024, while the three-year public service wage agreement, offering a first-year increase of 5.5%, has already exceeded budget expectations by R23.4bn, contributing to Treasury’s decision to raise taxes.
According to Kruger, average nominal salary increases of 5.3%, against a projected inflation rate of 3.6%, suggest a real wage increase of 1.7% for 2025.
“This will be the second consecutive annual real increase and an important supporting factor for household consumption expenditure in 2025,” she said.
Retail activity appears to be responding. Real retail sales grew by 5.9% in the four months to January 2025, compared to the same period a year earlier, reflecting the impact of rising disposable incomes.
“The improved outlook for household consumption expenditure is a welcome development — especially as an increasing number of downside risks begin to cloud the 2025 economic horizon,” Kruger said.
This has been further supported by the two-pot retirement system, which released billions into the economy, and a cumulative 75 basis points cut in interest rates.
However, risks to the broader economic outlook persist. Geopolitical instability and the potential fallout from an evolving global trade war pose risks to exports and investor confidence, the BankServ statement reads.
According to the statement, SA’s GDP is forecast to grow by 1.5% in 2025, up from 0.6% in 2024, but downside risks are growing.
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