PayInc Index shows modest salary gains but higher earners lose ground

South Africa’s average net salary edged higher in August 2025, but signs of job losses among higher earners remain a concern, according to the PayInc Net Salary Index (formerly the BankservAfrica Take-home Pay Index).

The index rose marginally to R21 222 in August, up 0.2% from July and 2% higher than a year earlier.

The upward trend evident in net salaries during 2024 has spilled over to 2025, with the average nominal net salary in the first eight months of 2025 up by 4.6% compared to the corresponding period in 2024. 

“The recovery in salaries reflects the moderate improvement in economic activity and the economy’s resilience, despite multiple challenges,” said Elize Kruger, an independent economist.

Kruger added that the number of salaries paid signals that just more than 216 000 additional salaries were paid, cumulatively, in the first eight months of 2025.

“According to the revised PayInc sample, fewer salaries were paid in the income range between R40 000 – R100 000 year-to-date, suggesting job losses in those categories, while the bulk of additional salary payments were in the lower income band.”

“More specifically, the income ranges between R5 000 - R10 000 per month and, to a lesser extent, the income categories reflecting net salaries between R10 000 - R40 000. The refreshed PayInc Net Salary Index confirms the narrative that 2025 will, on average, be a good salary year, despite the uncertainties and challenges impacting the economic outlook.”

The Index said that, in real terms, the PayInc Net Salary Index declined by 0.1% month-on-month to R20 758 in August 2025, marginally lower compared to R20 782 in July, and the second consecutive month that real net salaries dipped below year-ago levels.

“Still, with consumer inflation on average only 3.1% in the first eight months of 2025, the average real net salary has increased by 1.5% compared to the corresponding period in 2024,” noted the index.

“With a full year average consumer inflation forecast at 3.3% in 2025 (vs 4.4% in 2024) and industry data suggesting an average salary increase above 5%, 2025 will likely be the second consecutive year of a real increase in earnings.”

Kruger said this was a welcome tailwind for salary earners, supporting consumption expenditure and could assist in softening the impact of global headwinds on the local economy.

“While the salary environment has improved notably since 2024, in both nominal and real terms, the eroding impact of the dismal years between 2021 and 2023, specifically the negative impact of high inflation on salary earners' purchasing power, is still a reality.”

The index also noted that the trend in real net salaries since 2020 suggested that although salaries have recently played catch-up, it is still lagging notably compared to earlier years.

“As such, salary earners are continuing to feel the pinch of the higher cost of living.”

The index said despite notable improvements in salaries since 2024, the strain on earnings from the dismal years of 2021–2023 continues to weigh on households, particularly the declining purchasing power caused by high inflation.

Professor Waldo Krugell, an economist at North-West University, said that the good news was an increase in additional salary payments processed, which points to some formal job creation.

“From a household point of view, the real increases in salaries are good news. To beat the average inflation rate always helps to ease a tight budget and fuels a little bit of consumer spending (as we have seen in other data),” Krugell said.

“But such above-inflation increases are exactly what the South African Reserve Bank wants to limit in their efforts to reduce inflation to a 3% target.”

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