South African take-home pay declines in real terms
South African salaries have increased over the last five years. However, the increases have been outstripped by inflation resulting in the average take-home salary being worth less in real terms.
This is according to BankservAfrica’s Five-year Review of Take-home Pay and Private Pensions in South Africa. The review measured salaries in South Africa from February 2018 to February 2023.
The average nominal salary increased over the last five years by 22.8% – from R12,573 to R15,438. However, inflation over the period was 26.6%.
This means the average salary in South Africa in 2023 is worth 3.8% less in real terms than the average salary in 2018.
Salaries in South Africa matched inflation from 2018 to 2021. However, a spike in inflation in 2022 saw it outstrip salary increases.
Inflation is not the only thing to blame for salaries decreasing in real terms.
Bankserv pointed to an “exceptionally challenging” economic environment in South Africa with rampant load-shedding, a weak currency, and rising interest rates.
These factors constrain business activity and confidence, reduce employment and limit wage increases.
South Africans receiving formal salaries increased by only 455,140 from 2018 to 2023 due to the country’s weak economic performance.
Companies’ capital expenditure has also been redirected from expansion and growth to backup or alternative electricity sources, which has further limited wage growth in the country.
Worryingly, Bankserv expects the trend of inflation outstripping salary growth to continue for the foreseeable future due to structural economic issues in South Africa.