Geopolitical unrest across the world is not expected to affect South Africans’ salaries this year, an economist says.
With the gold price over $5 000 and the rand sitting under R16/$, South Africans are now wondering how they will benefit from this good news, as well as other positive factors, such as low inflation, when it comes to their salaries.
PayInc, a payments provider, conducted an analysis of these factors for its PayInc Net Salary Index and says, supported by positive economic developments, record-high commodity prices, a stronger rand, and low inflation, real salary increases are expected this year.
The PayInc Net Salary Index reflects the average nominal net salary of approximately 2.1 million salary earners in South Africa, earning between R5 000 and R100 000 per month on a net basis. The Index ended 2025 on a positive note, with salaries tracking higher than a year ago.
“Although the average nominal salary flattened in December 2025 at R21 397, it was still 1.8% higher than a year ago,” Shergeran Naidoo, head of stakeholder engagements at PayInc, says. “The upward trend in net salaries during 2024 continued into 2025, with the average nominal salary increasing by 3.7%, compared to 4.6% in the year before.”
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Sustained recovery in salaries reflects improvement in economic activity
Elize Kruger, an independent economist, points out that the sustained recovery in salaries reflects the gradual improvement in economic activity and the economy’s resilience, despite multiple challenges.
In real terms, the PayInc Net Salary Index decreased by 0.3% in December compared with November to R20 641, marking the sixth consecutive month of dipping below year-ago levels. This also reflected the gradual uptick in consumer inflation from 2.7% in March to 3.6% in December.
“Still, with average consumer inflation at only 3.2% in 2025, the average real net salary as measured by the PayInc Net Salary Index was still up by 0.5% compared to 2024,” she says.
Kruger is optimistic that 2026 will deliver another year of real salary growth. “From record-high commodity prices and a rand trading below the R16/$ mark for the first time since 2019, to consumer inflation at its lowest average level in 21 years, there is good reason to expect a positive year for salaries. In addition, there remains scope for further interest rate cuts.”
Carpe Diem Research forecasts real gross domestic product (GDP) growth of 1.6% in 2026, up from an estimated 1.3% in 2025. Consumer inflation is forecast to increase to 3.4% in 2026 from a 21-year low of 3.2% in 2025.
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Factors that will drive price setting for salaries
Kruger says price-setting will likely be driven by moderate global oil prices, a stronger rand and easing inflation expectations.
“A gradual downward trend in wage settlements in the medium term can be expected as companies start to embrace the lower inflation expectations. However, multi-year wage agreements, set under the previous inflation target regime, will support the average salary increase in the economy for some time.”
A recent Andrew Levy Employment Publication poll on stakeholder and company expectations about salaries in 2026 reveals that most companies anticipate salary increases to remain at the same level as the last settlement.
In terms of increases in remuneration for salaried staff, 67% of respondents anticipated these would range between 4% to 5.9%. Kruger says the findings show it will take some time for wage expectations to adjust to the new lower inflation target adopted for South Africa in 2025.
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Other factors determining salary adjustments
Meanwhile, other factors determine wage adjustments. One of the most significant findings from the latest Remchannel quarterly report is the growing influence of skills retention on remuneration strategies.
Skills retention now accounts for 25.8% of the criteria local companies use when determining annual salary increases, showing a decisive shift toward skills-based pay structures.
“With a second consecutive year of real income growth, 2025 was a positive year for earners and supported higher consumption, as reflected in stronger retail sales. Given the positive developments in the economy, a repeat performance is likely in 2026,” Kruger says.
