The real purchasing power of South African employees has declined by slightly more than 40% against electricity, fuel, utilities and food over the past decade – even as headline inflation has generally remained inside the Reserve Bank’s target range.
This is according to new analysis from leading earned wage access and employee financial wellness platform, Paymenow, which says the gap between official inflation and the lived cost of living is now wide enough that traditional, salary-only remuneration models are quietly failing employers and employees alike.
Fuel and energy inflation continues to compound the pressure on take-home pay, and current geopolitical volatility is expected to push it even higher in the months ahead.
South African workers spend between 35% and 50% of disposable income on transport, fuel and utilities. Cumulative electricity tariffs have risen by 132% over the past 10 years, paraffin by 226%, diesel by 132% and petrol by 86%. Over the same period, average wages across all industries have grown by just 61,2%.
Paymenow’s analysis was based on underlying data drawn from Statistics South Africa, the Bureau for Economic Research, Nersa, the South African Reserve Bank and other publicly available sources. The 40% purchasing-power figure is calculated as the gap between the cumulative sum of annual average wage increases and the actual cumulative increases in electricity, fuel and utility prices over the past decade.
Rene Richter, Reward and Benefits lead advisor at Paymenow, says the figures expose a strategic risk that many employers are still pricing in as a pure wage problem.
“When electricity has more than doubled, fuel keeps climbing and households face mounting financial pressure, an above-inflation salary increase no longer necessarily protects an employee’s standard of living,” says Richter. “Employers are absorbing the consequences in the form of higher wage demands, hidden productivity loss, absenteeism and disengagement.”
Richter says South African organisations are increasingly moving away from one-size-fits-all pay strategies in favour of a more holistic total reward approach – one that pairs base pay with financial wellness programmes, debt management support, financial education, savings tools, transport support and, where appropriate, flexible work arrangements.
“A rigid pay strategy will not survive the volatility we are seeing in 2026,” Richter adds. “Forward-looking employers are building remuneration scenarios in the same way they build financial forecasts: a growth case, a base case, a downturn case and a crisis case, each linked to clear triggers around revenue, currency and inflation. That discipline prevents reactive, last-minute cost-cutting that damages morale and erodes trust.”
Earned Wage Access (EWA) sits at the heart of this shift. By giving employees realtime access to wages they have already earned, EWA reduces reliance on payday lenders and informal credit, smooths the gap between income and essential expenses – and supports the financial education that turns short-term relief into long-term resilience.
Paymenow’s recently released 2026 Impact Performance Report, independently prepared by 60 Decibels, supports the case.
Of users surveyed, 94% reported an improved quality of life after using Paymenow and 59% described the improvement as significant – well above the 60 Decibels Africa Financial Inclusion benchmark of 40%. A further 89% reported better financial management, 88% experienced reduced financial stress, and 90% said they felt more in control of their finances. More than 60% of cash-outs are used for work-related expenses such as transport, with food (39%), emergencies (38%) and utilities (34%) following.
Richter concludes: “Workers’ Month is the right moment for employers to ask themselves: what are we doing to ensure financial literacy and assist employees to reduce financial stress in a landscape of sharp and volatile cost increases? Another inflation-linked increase is unlikely to close that gap on its own. The answer is to build a total rewards structure that treats financial wellbeing as core operating infrastructure, in the same way we treat safety or skills development.”