Despite a favourable inflation backdrop, SA salary earners experienced another dip in take-home pay in April 2025, marking the second consecutive month of decline amid mounting global and domestic uncertainty.
However, looking at the bigger picture, 2025 is still on track to deliver a second year of real wage growth — a trend that should help support household spending.
According to the latest BankservAfrica Take-home Pay Index (BTPI), the average nominal take-home pay declined by 2.0% month on month to R17,495 in April, down from R17,846 in March. Despite this drop, nominal salaries remain 13.8% higher than the R15,370 recorded a year ago, highlighting the recovery that began in mid-2024.
The BTPI tracks salary payments to about 3.8-million employees in SA’s formal economy.
“The upward trend in take-home pay from mid-2024 marks a positive development after years of sluggish growth and salaries lagging behind inflation,” the payments clearing house noted in a statement.
“However, the escalating global trade war has dampened sentiment worldwide — impacting confidence in SA and slowing economic activity as investors and households pull back on their spending.”
Adjusted for inflation, real take-home pay fell 2.2% to R15,005 in April, down from R15,344 in March. However, it still reflects a 10.6% year-on-year gain, driven by lower inflation.
“The significant moderation in consumer inflation during 2024 has had a positive impact on the purchasing power of salary earners and the scenario is continuing into 2025, with the latest headline CPI figure at only 2.8% for April,” said independent economist Elize Kruger.
Headline inflation is forecast to average 3.4% in 2025, down from 4.4% in 2024, making it the lowest annual rate since 2020.
“With this favourable inflation scenario, 2025 [is likely to be] the second consecutive year of positive real take-home pay growth, supporting demand in the economy,” Kruger added.
But despite softer inflation, salary earners continue to feel the pinch of a high cost of living, unchanged tax brackets and an inflation-linked fuel levy introduced in the 2025 National Budget.
As reported by Business Day, the failure to adjust tax brackets means workers may be pushed into higher tax bands even if their salary increases are due to inflation.
Yet, Kruger noted a stronger rand and declining oil prices were expected to contribute to another round of fuel price cuts in June, offsetting some of the pain from rising government levies.
Real interest rates also remain high. With the repo rate at 7.5%, the real repo rate is sitting at 4.1%, well above the estimated neutral level of 2.8%.
According to the market consensus, the Reserve Bank is expected to cut rates on Thursday following the monetary policy committee’s (MPC’s) deliberations this week.
“A lowering in the cost of credit could go a long way to offering relief to households and the business sector, boosting confidence levels somewhat,” Kruger said.
Early signals suggest real GDP growth for 2025’s first quarter could be zero or even negative, BankservAfrica noted in its statement.
“Although the worst-case scenario for the trade war impact seems to be averted, economic growth forecasts were trimmed notably for the global economy, while local growth prospects are also expected to disappoint,” said Kruger.
“This could hurt employment and earnings prospects of salary earners in SA in coming months.”
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