SA’s salary earners took home slightly less in March 2025, reflecting growing pressure on the economy from both domestic and global developments.
“However, [the] announcement to scrap the proposed VAT increase offers some reprieve,” payments clearing house BankservAfrica noted.
According to the latest BankservAfrica Take-home Pay Index (BTPI), average nominal take-home pay slipped to R17,811, down 2.5% from February’s R18,272, though still 11.4% higher than a year ago.
The index monitors the average nominal take-home pay of about 4-million salary earners in SA.
The decline comes as escalating global trade tensions, local political uncertainty and a sharp downward revision in growth forecasts weigh on confidence and may begin to affect employment and earnings prospects in the coming months.
According to a statement, despite the nominal decline, salary earners are still better off in real terms than they were a year ago. Adjusted for inflation, real take-home pay fell by 2.9% month on month to R15,343, but remained 8.1% higher year on year.
“The significant moderation in consumer inflation during 2024 has had a notable positive impact on the purchasing power of salary earners,” said Elize Kruger, independent economist.
“This trend has carried into 2025, with headline CPI [consumer price index] figure easing to just 2.7% in March — the lowest level since June 2020.”
Headline CPI is now forecast to average at about 3.4% in 2025 compared with 4.4% in 2024, reaching the lowest annual rate since the 3.3.% recorded in 2020, she said.
“On the assumption that inflation will remain well-contained, 2025 will likely be the second consecutive year of positive real take-home pay growth, supporting demand in the economy,” Kruger said.
“This relief is much needed, as salary earners remain under strain from the high cost of living, persistently elevated interest rates, and additional tax burdens resulting from the no adjustment to tax brackets announced in the 2025 national budget.”
The significant moderation in consumer inflation during 2024 has had a notable positive impact on the purchasing power of salary earners
— Elize Kruger, independent economist
However, she said that the decision to withdraw the proposed VAT increase would come as welcome relief and would probably lift confidence levels slightly.
The dip in take-home pay comes against a turbulent backdrop. The escalating global trade war, sparked by new (and currently paused) import tariffs in the US has already begun to disrupt SA’s key export sectors — especially automotive, agriculture and manufacturing, which previously enjoyed duty-free access under the African Growth and Opportunity Act (Agoa).
“In those sectors ... the anticipated negative impact on businesses is likely to filter through to the workforce in the form of constrained opportunities and earnings pressure,” Kruger said.
Though the direct impact is limited to about 8% of SA’s exports, the indirect effects on global demand and SA’s trading partners are expected to be more significant.
This week, the IMF downgraded its SA growth forecast to just 1.0% for 2025 rising to only 1.3% in 2026. It also raised the risk of a global recession from 17% in October 2024 to 30%.
“While uncertainty remains exceptionally high, the current low inflation environment, supported by lower international oil prices and the rand’s recovery offers an opportunity for monetary policy to play a role in offsetting some of the economic impact of recent global shocks,” Kruger said.
“Given that real interest rates remain unusually high for an economy stuck in a low-growth cycle, the SA Reserve Bank could lower interest rates further without compromising its mandate to keep inflation within the 3%-6% target range.” The central bank’s next monetary policy committee announcement is in May.
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