Receiving a salary increase should mean having more money available, but for many South Africans, a higher amount on your payslip does not necessarily translate into a better standard of living. As the cost of groceries, electricity, transport and other essentials rises , employees may find that their income simply does not stretch as far as it used to.
According to Lindiwe Sebesho, exco member at the South African Reward Association (SARA), the key is understanding the difference between earning more money as a result of an increase and being able to afford more.
“A pay rise only makes you better off if it grows faster than the things you have to pay for,” says Sebesho.
Inflation puts pressure on purchasing power
The South African Reserve Bank’s October 2026 Monetary Policy Review shows inflation rising from 3,2% in the first quarter to 4,5% in the second quarter, with inflation expected to remain above 5% until the second quarter of 2027.
When prices rise faster than income, the purchasing power of a salary declines. This means that even if an employee receives an increase, the additional money may not cover the rising cost of everyday essentials.
The pressure is reflected in recent earnings figures. Statistics South Africa reported that average monthly earnings increased by 4,1% year-on-year to May 2026, while the Reserve Bank reported real remuneration per worker growth of just 1% year-on-year in the first quarter of 2026.
These figures measure different aspects of earnings, but illustrate why an increase in income does not necessarily translate into an equivalent improvement in living standards.
Higher transport costs leave less money to spend
The latest petrol price increase adds further pressure, particularly for employees who depend on their cars or public transport to get to work. Higher fuel costs contribute to increased transport and food expenses, placing additional strain on household budgets.
“Getting to work is an essential cost for many employees, and it is often difficult to reduce. When fuel prices rise, more of an employee’s salary goes towards simply getting to work, leaving less available for other expenses,” says Sebesho.
The impact is not equal for everyone. Lower-income households often spend a larger proportion of their earnings on essentials such as food, electricity and transport. Employees whose jobs require them to be on site, commute long distances or support dependents may have even less flexibility when costs increase.
Your increase may not be what reaches your bank account
Another important consideration is whether an increase applies to an employee’s basic salary or total guaranteed package. A total package may include the cost of benefits such as retirement funding and medical aid, while tax, UIF and other deductions affect the amount ultimately received.
“An increase in your total package does not necessarily mean an equivalent increase in the cash available to spend each month,” Sebesho explains.
For example, a 5% increase in a total package does not necessarily mean 5% more cash in your bank account. Some of the increase may be absorbed by higher benefit contributions or deductions, while rising household expenses further reduce what your income can buy. This is why employees should look beyond the percentage increase and assess the actual change in their take-home pay.
Employees should compare their pre and post increase payslips, check changes to deductions and calculate how much additional money actually reflects as net pay and reaches their bank accounts. They can then compare this with increases in essential expenses, including housing, groceries, electricity, transport and debt repayments.
How to tell whether you are genuinely better off
Reviewing a few months of spending can help employees identify where costs have increased and where adjustments may be possible. It is also worth checking available workplace benefits, including medical aid, retirement funding, financial guidance and any transport support.
However, the issue is not simply about cutting expenses. Understanding how salary, benefits, deductions and rising prices interact helps employees assess their financial position more accurately and where possible, plan for performance and progression that can help them earn more.
“The real test is whether the extra money reaching your bank account is more than the increase in your essential costs,” says Sebesho.
A salary increase is valuable, but the headline percentage tells only part of the story. What matters is whether it helps employees cover everyday expenses and maintain their standard of living. Employees who are struggling to cover essential expenses should seek appropriate support proactively.