The PayInc Net Salary Index, which tracks the average nominal net salaries of approximately 2,1-million South African earners, edged higher in March 2026.
Remaining above year-ago levels, the data points to a stabilisation in net salaries over the first quarter of 2026. However, economic uncertainty linked to the war in the Middle East is expected to weigh on the outlook for the remainder of the year.
“South Africa’s net salaries increased by a marginal 0,1% month-on-month to reach R21 508 in March, remaining 2,3% higher than a year ago,” says Shergeran Naidoo, head of stakeholder engagements at PayInc.
However, the nominal growth in net salaries continue to tread water, with the PayInc Net Salary Index declining in real terms by 1% year-on-year in the first quarter of 2026.
“While both headline and core inflation remained well under-control and aligned with the South African Reserve Bank’s newly adopted inflation target up to March, the significant fuel price spikes in April has derailed the favourable outlook for inflation envisaged at the start of the year,” says independent economist Elize Kruger.
Although government has provided some relief in the form of a three-month fuel levy subsidy, in effect from April – June 2026, costing the fiscus R17,2-billion in forfeited tax revenue, the impact on the economy remains severe.
National Treasury indicated that the fuel levy relief measure has been designed to be revenue neutral and will be funded through higher-than-expected tax revenue and underspending and will not affect the fiscal framework. Economists noted that 2027 revenue projections appeared conservative, given potential corporate tax windfalls from elevated 2025 commodity prices.
“This conservatism will now stand government in good stead to soften the blow of the Middle East war on the South African economy,” says Kruger. “Lowering the fuel levy will moderate the direct impact of the fuel price increases on consumer inflation, which will be helpful from a monetary policy point of view, hopefully reducing the chance for pre-emptive interest rate hikes, in response to the higher near-term consumer price inflation. The government’s ability to act to protect the economy in a period of unexpected hardship, is firmly in the spotlight in the current crisis.”
While the fuel levy extension relief is welcomed, the extent of the fuel price increases still to be implemented in coming months will hurt the economy in many ways.
On the petrol price, the R3.06/l increase on 1 April, will be followed by another increase of around R2.00/l on 6 May, excluding any increase in the slate levy. Similarly, for the diesel price, the April increase of R7.37/l will be followed by an increase of around R3.60/l on 6 May, excluding any increase in slate levy.
Cumulatively, the impact even before the fuel levy re-enters the calculation, will be around R5/l for petrol and R11/l for diesel. “This remains a notable shock to the economy and the probability that it could trigger a widespread upward adjustment in prices across the economy remains very high, but also dependent on how long fuel prices remain at these levels,” says Kruger.
Following this, consumer inflation is expected to rise, averaging around 4,4% in 2026, compared to the pre-war baseline forecast of approximately 3,4%. “This is an undesirable outcome for a Central Bank that has recently adopted a 3% inflation target – with a tolerance band of 1% – stoking a growing probability that interest rate hikes could be on the cards in a few months’ time,” says Kruger.
The anticipated worsening inflation scenario will hit salary earners’ purchasing power, likely resulting in negative net salary growth in real terms in 2026.
The employment space is expected to be impacted in different ways. Unionised sectors will pressurise employers for higher annual salary increases to mitigate the negative impact of higher transport costs on workers’ purchasing power.
More responsive to the economic environment, the private sector could respond by moderating wage offers to maintain employment and keep the doors open in a difficult economic environment. In its latest Bureau of Economic Research Inflation Expectations Survey, analysts and businesspeople forecast nominal salary growth of 4,1% and 4,7%, respectively for 2026, whereas trade union officials are predicting 5,1%.
“With the uncertainties about the eventual impact of the war on the local and global economy likely to loom for some time, the South African economy enters a period where companies will most probably retreat to conservative mode, taking a wait-and-see approach, and postpone major decisions until there’s more clarity,” says Kruger. “This could have a negative impact on employment prospects and earnings expectations in the remainder of 2026.”