Good news for salary earners as the BankservAfrica’s Take-home Pay Index has revealed that the average take-home pay rose to R18,098 in January 2025.
This reflects the positive developments in the earnings landscape.
The index, which tracks the average nominal take-home pay of an estimated four million salary earners in South Africa, started the year on a strong note.
Shergeran Naidoo, head of Stakeholder Engagements, BankservAfrica said: "The average take-home pay rose to R18,098 in January 2025, compared to R17,246 in December 2024 and R15,564 one year earlier."
The upward trend in average salaries started in 2024, and while there was some monthly volatility, nominal take-home pay continues to tick higher, according to BankservAfrica.
According to Naidoo, in real terms, take-home pay also rose to R15,659 in January 2025, a 12.8% hike year-on-year and reached its highest level since February 2022.
"As such, the real take-home pay averaging at R14,292, up by 3.1% in 2024, represented the first real increase in take-home pay since 2020," Elize Kruger, an independent economist said.
This was driven by a moderation in consumer inflation during 2025, from 5.3% in January to 3.0% in December 2024. This had a positive impact on the purchasing power of salary earners, plus, the headline CPI averaged at 4.4% in 2024, the lowest annual rate since 2020.
Kruger said: "This positive remuneration trend evident in the BankservAfrica sample reflects a generally improved business environment, notable moderation in inflation, higher confidence levels in the economy, and three interest rate cuts that have provided much-needed relief.
"Company profitability also improved during 2024, as reflected in the above inflation increase in the gross operating surplus of companies. The improving environment was also echoed in the sizeable total return on the FTSE/JSE All Share Index in 2024 (+13.4%), reflecting the promising earnings potential of listed companies.
"As such, the real take-home pay averaging at R14,292, up by 3.1% in 2024, represented the first real increase in take-home pay since 2020," Kruger said.
Kruger said that with the assumption that inflation will remain well-contained in 2025, and the average headline CPI forecasted to be at 4.2%, this year could be the second consecutive year of positive real take-home pay growth.
The observed recovery in disposable income has been reflected in improved retail sales, with real retail sales growth for 2024 at 2.5%, higher than the previous year, compared to 1.2% in 2023, according to Kruger.
Passenger car sales also started to recover towards the end of last year, with full-year growth of 1.1% compared to the 4.3% contraction in 2023.
The cumulative 75bps reduction in interest rates and withdrawals from the two-pot retirement system would have also supported consumer spending.
IOL Business