BankservAfrica’s Take-home Pay Index (BTPI), which tracks the average nominal take-home pay of around 4 million South African salary earners, reflects a strong stat to 2025 for the earnings landscape.
The average take-home pay rose to R18 098 in January 2025, compared to R17 246 in December 2024 and R15 564 one year earlier, said Shergeran Naidoo, BankservAfrica’s Head of Stakeholder Engagements.
This upward trend in average salaries, which began early in 2024, has shown resilience despite some monthly fluctuations, continuing to show incremental increases.
“This positive remuneration trend evident in the BankservAfrica sample reflects a generally improved business environment, notable moderation in inflation, higher confidence levels in the economy, and three interest rate cuts that have provided much-needed relief,” said Elize Kruger, independent economist.
Company profitability also improved during 2024, reflected in the above-inflation increase in the gross operating surplus of companies. The promising business environment was also highlighted by a substantial return on the FTSE/JSE All Share Index in 2024 (+13.4%), demonstrating the strong earnings potential of listed companies.
In real terms, take-home pay also rose to R15 659 in January 2025, marking a significant 12.8% increase compared to the same period last year, and reaching its highest level since February 2022.
This increase was driven by a substantial reduction in consumer inflation, which decreased from 5.3% in January to 3.0% in December, enhancing the purchasing power of South African salary earners.
Additionally, the headline Consumer Price Index (CPI) averaged 4.4% in 2024, the lowest rate since 2020.
“As such, the real take-home pay averaging R14 292, up by 3.1% in 2024, represented the first real increase in take-home pay since 2020,” said Kruger.
With inflation expected to remain moderate in 2025, with a forecasted average headline CPI of 4.2%, 2025 is expected to be the second consecutive year of positive real take-home pay growth.
This recovery in disposable income has been reflected in stronger retail sales, with real retail sales growth for 2024 at 2.5%, up from a -1.2% contraction in 2023.
Passenger car sales also started recovering in late 2024, with a full-year growth of 1.1%, compared to a -4.3% decline in 2023. The cumulative 75bps reduction in interest rates, coupled with Two-Pot Retirement System withdrawals, has supported consumer spending.
Looking ahead, the economic outlook for 2025 indicates that the salary gains seen in 2024 could continue to strengthen.
Real GDP growth is projected to increase by 1.7% in 2025, slightly higher than in 2024. This growth will be driven by a combination of improved household consumption, higher fixed investment spending, and ongoing structural reforms.
The continued focus on improving South Africa’s electricity generation, addressing supply chain blockages, and upgrading water infrastructure is expected to propel the economy forward.
“The anticipated improvement in the business environment is expected to enable companies to offer more substantial salary increases in 2025, which, combined with a moderate inflation environment, could lead to a second consecutive year of real increases in take-home pay,” said Kruger.
However, if the 2025 National Budget had introduced a 2% VAT increase, it could have negatively impacted the inflation outlook, potentially undermining the fragile recovery in the purchasing power of salary earners.
“While we await the revised budget on 12 March, the delay has introduced uncertainty, raising concerns about its potential impact on the economy’s recovery prospects,” said Kruger.
