South African salary earners ended 2025 on firmer footing, despite late-year pressure on purchasing power, and are likely to see another year of real income growth in 2026, according to new data from PayInc.
The PayInc Net Salary Index, which tracks the average nominal net salaries of about 2.15-million South Africans earning between R5,000 and R100,000 a month, moderated slightly in December, closing the year at R21,397 — 1.8% higher than a year earlier. Nominal net salaries rose by an average of 3.7% in 2025, slower than the 4.6% increase recorded in 2024.
In real terms, however, momentum weakened towards the end of the year. The index fell 0.3% month on month in December to R20,641, marking the sixth consecutive month in which real net salaries were below year-ago levels, as consumer inflation edged up from a low of 2.7% in March to 3.6% in December.
Still, with average consumer inflation at 3.2% in 2025, the lowest in 21 years, real net salaries for the year as a whole were 0.5% higher than in 2024, confirming a second consecutive year of real income growth.
“The sustained recovery in salaries reflects the gradual improvement in economic activity and the economy’s resilience, despite multiple challenges,” said independent economist Elize Kruger.
Kruger said conditions remained supportive of another year of real salary gains. “From record-high commodity prices and a rand trading below the R16/$ mark for the first time since 2019, to consumer inflation at its lowest average level in 21 years, there is good reason to expect a positive year for salaries,” she said, adding there remains scope for further interest rate cuts.
She forecasts GDP growth of 1.6% in 2026, up from an estimated 1.3% in 2025, while inflation is expected to rise modestly to 3.4%, still well contained by historical standards.
“A gradual downward trend in wage settlements in the medium term can be expected as companies start to embrace the lower inflation expectations,” Kruger said. “However, multiyear wage agreements, set under the previous inflation target regime, will support the average salary increase in the economy for some time.”
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