After three months of moderation, SA’s average take-home pay held steady in June as slowing inflation and the prospect of lower interest rates provided some breathing room for salary earners.
According to the latest BankservAfrica Take-home Pay Index (BTPI), nominal take-home pay edged down just 0.1% to R17,310 in June, from R17,325 in May.
On a year-on-year basis, however, nominal pay was almost 12% higher than the R15,514 recorded in June 2024, continuing a broadly positive trend from mid-2024.
The BTPI reflects salary payments to about 3.8-million formal sector employees in SA.
In real terms, adjusted for inflation, take-home pay dipped 0.2% to R14,804 in June, from R14,827 in May. Still, real pay was up compared to a year ago.
“Some stabilisation evident in take-home pay levels is indeed welcomed. While the first six months’ data signals that 2025 will on average be a good salary year, the economic outlook has deteriorated in recent months and will likely put a damper on employment and earnings prospects in SA in coming months,” the report stated.
According to Elize Kruger, independent economist, “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 3% for June 2025”.
According to the BTPI, 2024 emerged as the best year for salary earners since 2015, delivering an average real salary increase of 1.5%.
“With inflation forecast to average 3.5% in 2025 — unlike 4.4% in 2024 — and the broader industry suggesting an average salary increase above 5%, 2025 will be the second consecutive year of a real increase in earnings,” Kruger said.
The inflation backdrop has created space for monetary policy easing. Kruger forecasts a 25-basis-point cut at the monetary policy committee meeting’s announcement on Thursday.
Despite global shocks and local challenges, real household consumption expenditure has remained robust, BankservAfrica’s report noted.
Stats SA data shows real retail sales were up 4.3% in the first five months of the year compared to a year earlier, while final consumption by households rose 2.8% year on year in the first quarter.
However, confidence levels have slipped, and investment activity remains muted.
BankservAfrica warns the general economic environment has deteriorated, with growth forecasts revised down both globally and locally. SA’s high unemployment rate of 32.9% could worsen if the uncertain economic environment persists, the report notes.
“Investors and households typically hold back on spending decisions until more clarity is forthcoming,” the report cautioned. “This could have a negative impact on employment levels and earnings in coming months.”
Mounting concern over trade relations between SA and the US, especially ahead of potential tariff changes after August 1, is adding to the uncertainty.
“As such, it remains of utmost importance that the SA government prioritise its diplomatic engagement with US authorities to negotiate a favourable trade regime to avert job losses in sectors, such as automotive and agriculture, which would otherwise face severe impacts,” Kruger said.
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