If you earn a salary you will be glad to hear that there is some relief coming, but the dark cloud of US tariffs still hovers.
Salaries stabilised in June after three months of decline, supported by a favourable inflation environment and an anticipated interest rate cut on Thursday. Salary earners may see some relief from financial pressures, but external factors are still expected to weigh on future earnings and unemployment levels.
Take-home pay, tracked in the BankservAfrica Take-home Pay Index (BTPI), held steady in June after three months of moderation. “The nominal average take-home pay was R17 310 in June, showing a marginal 0.1% decline on May’s R17 325.
“However, this was still notably above the R15 514 level of a year ago,” Shergeran Naidoo, BankservAfrica’s head of stakeholder engagements, says.
However, Elize Kruger, an independent economist, says while the first six months of BTPI data signals 2025 will, on average, be a good salary year, the economic outlook has deteriorated in recent months.
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Significant moderation in inflation helped salaries
Real take-home pay, adjusted for inflation, moderated marginally by 0.2% to R14 804 in June, compared to R14 827 in May, but was still notably up on year-ago levels.
“The significant moderation in consumer inflation during 2024 had a positive impact on the purchasing power of salary earners and the scenario is continuing into 2025, with the latest headline inflation at only 3% for June,” Kruger says.
After a challenging few years for salary earners, due to the sluggish local economy and the elevated inflation rate, 2024 turned out to be the best year since 2015, with an average real salary increase of 1.5%.
“With inflation forecast to average 3.5% in 2025 unlike the 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 says in addition to supporting salary earners’ consumption expenditure and softening the impact of global headwinds on the local economy, the favourable inflation environment created ample scope for the South African Reserve Bank (Sarb) to cut interest rates further.
“Carpe Diem Research Services forecasts a 25 basis points cut at the Monetary Policy Committee (MPC) meeting tomorrow. This is likely to be the final cut in the current downward cycle.”
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2025 volatile but real consumption held up well
Despite 2025 turning out to be a volatile year so far, real consumption expenditure held up well, which is an encouraging sign for an economy heavily reliant on consumer spending. Even with confidence levels slipping in the first quarter, the level of real final consumption expenditure by households was 2.8% higher compared to a year earlier.
Early indications from Statistics SA indicate that the performance continued in the second quarter, with real retail sales in the first five months of the year up by 4.3%.
Uncertainty and low confidence could affect employment and salaries
However, Kruger points out that the general economic environment deteriorated in recent months, with downward revisions to growth prospects locally and globally and high levels of uncertainty, fuelling low confidence and a pause on investment decisions.
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“This could affect employment levels and earnings in the coming months, in an economy with an already high unemployment rate of 32.9%. In addition, tensions between the US and South Africa, coupled with uncertainty over the tariff landscape beyond 1 August, present a growing concern for the economy and its trade outlook.
“As such, it remains of utmost importance that the South African 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 says.