South African workers saw their take-home pay shrink for the third month in a row in May, according to the latest data from BankServAfrica. The report highlights a challenging economic environment marked by sluggish domestic growth and global instability, particularly due to ongoing tensions in the Middle East.
Worsening Wage Trends
The nominal average take-home pay fell to R17,296 in May, a 1.3% decline from April. However, this figure remains higher than the R15,930 recorded in the same month last year. Independent economist Elize Kruger noted that while wages showed an upward trend from mid-2024 to early 2025, recent months have seen a reversal.
“2025 has been volatile, marked by turbulence both globally and locally,” Kruger said. “This has resulted in an environment of low confidence and uncertainty, which is not conducive to economic activity. Companies are being conservative with salary increases due to reduced growth prospects.”
Inflation and Oil Price Risks
In real terms—accounting for inflation—take-home pay dropped 1.1% month-on-month in May. While consumer inflation eased to a low 2.8%, experts warn that rising international oil prices could push prices higher in the coming months.
Brent crude oil recently fluctuated between $78 and below $70 per barrel, influenced by geopolitical developments, including Middle East ceasefire talks. Krueger cautioned that higher fuel prices could lead to increased inflation, delaying potential interest rate cuts and further straining household budgets.
Calls for Structural Reforms
Kruger emphasized that South Africa’s high unemployment rate must remain a top government priority. She urged structural reforms in critical sectors like energy and logistics to boost medium-term growth, job creation, and income stability.
“We are in for a year where the scenario might be less positive than initially expected,” she said. “The environment seems less conducive to salary increases, earnings growth, and employment prospects for the rest of 2025.”
As economic pressures mount, workers and businesses alike brace for continued uncertainty, with hopes pinned on policy interventions to revive growth and stabilize incomes.