Salaries decreased by 2% in April, but higher than a year ago

Salaries decreased by 2% in April compared to March, but are still higher than a year ago, as take-home pay slowed again.

Mounting pressure on salaries also puts this week’s interest rate decision in the spotlight, raising hope for relief among salary earners.

According to the Bankservafrica Take-home Pay Index (btpi), the average nominal take-home pay recorded a second consecutive month of moderation in April. The Index reflects data from approximately 3.8 million salary earners.

“The nominal average take-home pay declined to R17 495 in April 2025, down 2.0% from R17 846 in March.

“Despite this deceleration, levels remain significantly higher than the R15 370 recorded a year ago,” Shergeran Naidoo, BankservAfrica’s head of stakeholder engagements, says.

He points out that the upward trend in take-home pay from the middle of last year marks a positive development after years of sluggish growth and salaries lagging behind inflation.

However, he says, the escalating global trade war has dampened sentiment worldwide, affecting confidence in South Africa and slowing economic activity as investors and households pull back on their spending.

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Economic forecasts not great, affecting salaries too

Elize Kruger, an independent economist, says although the worst-case scenario for the trade war impact seems to have been averted, economic growth forecasts were trimmed notably for the global economy, while local growth prospects are also expected to disappoint.

“This could hurt employment and earnings prospects of salary earners in South Africa in the coming months.”

Real take-home pay, adjusted for inflation, also moderated by 2.2% to R15 005 in April 2025, compared to R15 344 in March, but is still notably higher than a year ago.

 “The significant moderation in consumer inflation during 2024 had a positive effect on the buying power of salary earners and the scenario is continuing into 2025, with the latest headline inflation figure at only 2.8% for April 2025,” she says.

With headline CPI now forecast to average to be around 3.4% in 2025 compared to 4.4% in 2024, it will be the lowest annual rate since the 3.3% recorded in 2020.

The recent increase in the rand exchange rate, combined with a lower international oil price will result in further fuel price declines in June despite the increase in the fuel levy, while the sluggishness in the economy keeps demand-driven pricing pressures well contained.

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2025 expected to be a good year for salaries

“With this favourable inflation scenario, 2025 will likely be the second consecutive year of positive real take-home pay growth, supporting demand in the economy,” Kruger says.

However, with the elevated cost of living, additional taxes announced in Budget 2025, with no adjustment to tax brackets and an inflation-related fuel levy increase, as well as continuing high interest rates, salary earners remain under pressure.

Early indications are that the real gross domestic product (GDP) growth rate for the first quarter of the year will likely be zero, or even negative. With the current repo rate at 7.5%, the real repo rate stands at 4.1%, which is a very restrictive stance if the neutral real repo rate of 2.8% is considered, Kruger says.

“A decrease in the cost of credit could go a long way to offer relief to households and the business sector, boosting confidence levels somewhat, while also lowering the hurdle rate on capital expenditure programmes.

“While a more aggressive cut would have been welcomed, the South African Reserve Bank (Sarb) is likely to cut interest rates by only 25 basis points at best at its Monetary Policy Committee meeting on Thursday.”

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Slightly higher salaries not enough – we need repo rate cut

With the economy stalling in the first quarter and global pressures mounting, accelerating structural reforms is now critical. Tackling energy, logistics and governance challenges will help to unlock growth and buffer against external shocks.

“The current low inflation environment, supported by lower international oil prices and the rand’s notable recovery in recent weeks, provides an opportunity for monetary policy to play a role in offsetting some of the pain inflicted on the economy by recent global developments, as many developing and developed economies have already done,” Kruger says.

“While the debate about lowering the inflation target band is ongoing, it should not prolong the pain inflicted on the economy by exceptionally high interest rates.”