The average nominal take-home pay in April 2025 recorded a second consecutive month of moderation, according to the BankservAfrica Take-home Pay Index (BTPI), which reflects data from approximately 3,8-million salary earners.
With economic headwinds mounting and pressure building on employment and income prospects, attention now turns to this week’s interest rate decision for potential relief.
“The nominal average take-home pay declined to R17 495 in April 2025, down 2% from R17 846 in March. Despite this deceleration, levels remain significantly higher than the R15 370 recorded a year ago,” says Shergeran Naidoo, BankservAfrica’s head of Stakeholder Engagements.
The upward trend in take-home pay from mid-2024 marks a positive development after years of sluggish growth and salaries lagging behind inflation. However, the escalating global trade war has dampened sentiment worldwide – impacting confidence in South Africa and slowing economic activity as investors and households pull back on their spending.
“Although the worst-case scenario for the trade war impact seems to be averted, economic growth forecasts were trimmed notably for the global economy, while local growth prospects are also expected to disappoint. This could hurt employment and earnings prospects of salary earners in South Africa in coming months,” says independent economist, Elize Kruger.
Real take-home pay, adjusted for inflation, also moderated by 2,2% to R15 005 in April 2025 compared to R15 344 in March, but still notably up on year-ago levels.
“The significant moderation in consumer inflation during 2024 has had a positive impact on the purchasing power of salary earners and the scenario is continuing into 2025, with the latest headline CPI figure at only 2.8% for April 2025,” says Kruger.
With headline CPI now forecast to average around 3,4% in 2025 versuss 4,4% in 2024, it will be the lowest annual rate since the 3,3% was recorded in 2020. Additionally, the recent appreciation in the Rand exchange rate combined with a lower international oil price will result in further fuel price declines in June – even despite the increase in the fuel levy – while the sluggishness in the economy keeps demand-driven pricing pressures well contained.
“With this favourable inflation scenario, 2025 will likely be the second consecutive year of positive real take-home pay growth, supporting demand in the economy,” says Kruger.
With the elevated cost of living, additional taxes announced in the 2025 National Budget – involving no adjustment to tax brackets and an inflation-related fuel levy increase – and continuing high interest rates, salary earners remain under pressure.
Early indications are that the Q1 real GDP growth rate will likely be zero, or even negative. With the current repo rate at 7,5%, the real repo rate stands at 4,1%, which is a very restrictive stance if the neutral real repo rate of 2,8% is considered, explains Kruger.
“A lowering in the cost of credit could go a long way to offering relief to households and the business sector, boosting confidence levels somewhat, while also lowering the hurdle rate on capital expenditure programmes,” she adds. “While a more aggressive cut would have been welcomed, the South African Reserve Bank is likely to cut interest rates by only 25bps at best at its Monetary Policy Committee meeting this Thursday 29 May 2025.”
With the economy stalling in Q1 and global pressures mounting, accelerating structural reforms is now critical. Tackling energy, logistics, and governance challenges will help unlock growth and buffer against external shocks.
“The current low inflation environment, supported by lower international oil prices and the Rand’s notable recovery in recent weeks, provides an opportunity for monetary policy to play a role in offsetting some of the pain inflicted on the economy by recent global developments, as many developing and developed economies have already done,” says Kruger. “While the debate about lowering the inflation target band is ongoing, it should not prolong the pain inflicted on the economy by exceptionally high interest rates.”