BankservAfrica’s Take-home Pay Index (BTPI), which tracks the average nominal take-home pay of an estimated 4-million salary earners in South Africa, closed December 2024 on a high note, showing a continuation of the growth observed throughout the year.
“The average take-home pay increased by 11,9% year-on-year to reach R17 202 in December 2024,” says Shergeran Naidoo, BankservAfrica’s head of stakeholder engagements. “This represents a significant leap from the R15 367 recorded in December 2023.”
The upward momentum in average salaries was evident throughout the year, despite some monthly volatility.
“The BTPI consistently highlighted 2024 as the strongest salary year since 2020. The positive shifts in the nominal take-home pay were buoyed by the recovering business environment, load shedding suspension, moderating inflation, new political landscape, and two interest rate cuts,” says independent economist Elize Kruger. “Additionally, company profitability improved further in 2024, evidenced by a gross operating surplus increase that exceeded the average inflation rate.”
The average nominal take-home pay increased by 7,9% in 2024 – the highest growth in years. However, this increase comes from a low base, as both 2023 and 2022 were dismal years for take-home pay. With inflation moderating notably during 2024, salary earners were better off in real terms in 2024.
“This recovery in disposable income has been reflected in healthier retail sales growth. Real growth for the eleven months to November 2024 was 2.4% higher than the corresponding period in the previous year, while passenger car sales also recorded positive growth in 2024,” says Kruger.
In real terms, take-home pay also tracked higher at R14 887 in December 2024, markedly up by 8,7% on year-ago levels. The substantial easing of consumer inflation in 2024, averaging 4,4% – the lowest rate since 2020 – has positively impacted the purchasing power of salary earners. In 2024, real take-home pay averaged R14 292, up by 3,1%, showing the first increase since 2020.
On the economic front, real GDP growth is forecast to increase by 1,7% in 2025, somewhat higher than in 2024, driven by a combination of improved household consumption expenditure, higher fixed investment spending, and advances in structural reforms.
On the latter, an ongoing focus on improving South Africa’s electricity generation capacity, addressing supply chain blockages relating to freight rail and port operations, and upgrading water infrastructure will help drive the economy. The anticipated improvements could see companies offer more substantial salary increases in 2025.
The improving purchasing power seen in 2024 will likely continue into 2025, providing valuable relief to cash-strapped households and support for consumer spending. Consumer inflation moderated notably in 2024, from 5,3% in January to end the year at 3%. With an average headline inflation of 4,4% in 2024 and an expectation of a similar average of 4,2% for 2025, multiple years of real increases in average salaries are expected, leaving more room for spending.
According to the latest Quarterly Bulletin of the SARB, the average nominal salary increase in H1 2024 was 5,2% compared to a full-year average of 4,5% in 2023. Assuming a 1,5% real increase and average consumer inflation of 4,2% are realised, average salary increases could be around 5,7% in 2025, according to Kruger. This will, however, depend on the employer’s financial health, the employee’s performance, and talent retention goals.
“With all these positive movements, looking ahead to 2025, salaries are expected to continue building on the gains achieved in 2024,” says Kruger.