Average monthly earnings in South Africa have shown a stronger increase than the rate of inflation, even though the country has seen a decline in overall employment figures. However, experts in salary and remuneration caution that employees should manage their expectations for future pay increases during 2025. The current global economic environment remains highly uncertain, presenting challenges for employers when negotiating salaries.
Key Takeaways
- Average Earnings Outpace Inflation: Between February 2024 and February 2025, South African employees saw a 5.6 percent rise in average monthly earnings, which exceeded the 3.2 percent inflation rate. This provided a modest real increase in disposable income for many workers.
- Salary Increases Likely to Remain Modest in 2025: Despite the improvement in earnings, salary experts caution that economic uncertainties, high interest rates, and rising operational costs will limit the scope for significant pay increases during 2025. Employers are expected to take a cautious approach to salary reviews.
- Broader Financial Pressures Persist: Increases in fuel levies, ongoing food price inflation, and weaker GDP growth are expected to strain both household and corporate budgets. Employees are advised to focus on optimising their full remuneration package, including benefits, rather than relying solely on salary increases.
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Average Monthly Earnings Rise by 5.6 Percent
The latest Quarterly Employment Survey (QES) released by Statistics South Africa indicates that average monthly earnings paid to employees rose by 5.6 percent between February 2024 and February 2025, reaching R28,289. This growth comfortably outpaced inflation, which stood at 3.2 percent in February, resulting in a real earnings increase of 2.4 percent for South African workers.
This means that, on average, employees are taking home more value for their earnings compared to the cost of living, a rare win for household budgets in recent times.
Despite this improvement, average monthly earnings remain slightly below the peak of R28,316 recorded in November 2024. In addition, gross earnings paid to employees declined by R47.3 billion, or 4.6 percent, moving from R1.03 trillion in December 2024 to R983.1 billion by March 2025. This decrease was attributed to declines in several key sectors, including community services, manufacturing, trade, construction, transport, electricity, and mining. This indicates that while individual salaries have improved modestly, the overall employment landscape is shrinking, with fewer opportunities and lower aggregate earnings flowing into the economy.
While many sectors experienced downturns, business services showed resilience. Gross earnings within this sector increased year-on-year by R26.1 billion, or 2.7 percent, between March 2024 and March 2025. This sector’s stability provides a glimmer of hope, suggesting that certain professional services industries continue to create value and demand skilled talent, even amid broader economic headwinds.
Basic Salaries See Decline
The amount paid in basic salaries and wages dropped by R9.4 billion, representing a decline of 1.1 percent, from R890 billion in December 2024 to R881 billion in March 2025. This reduction was similarly influenced by decreases in sectors such as community services, trade, manufacturing, construction, business services, transport, and mining.
On the other hand, the electricity sector recorded a year-on-year increase of R33.1 billion in earnings up to March 2025. Such trends reflect an uneven recovery across industries, where certain sectors linked to infrastructure and essential services are managing to grow, while others remain under pressure from both local and global market dynamics.
Bonuses and Overtime Payments Decline
Bonuses paid to employees fell by R36.5 billion between December 2024 and March 2025, which is in line with expectations, as bonuses are commonly issued at the end of the year. However, on a year-on-year basis, bonus payments also dropped by R5.7 billion, or 6.9 percent, by March 2025. Overtime payments also experienced a decline, with a year-on-year decrease of R1.3 billion, or 4.7 percent, reaching R26.3 billion in March 2025. The shrinking of bonuses and overtime highlights the extent to which companies are trimming costs beyond fixed salaries, cutting back on variable pay and incentives in an effort to weather the financial uncertainties of 2025.
Outlook for Salary Increases in 2025
According to the South African Reward Association (SARA), although many South African salary earners have benefited from lower inflation in recent months, it remains necessary to manage expectations for significant salary increases in 2025. The organisation highlights that mid-year is often a crucial period for salary reviews and adjustments.
However, given the economic uncertainties both within South Africa and internationally, employers are likely to adopt a cautious stance when making decisions on pay increases. Even companies with relatively healthy financials are likely to tread carefully, focusing on retention of top talent through non-cash benefits or tailored packages instead of blanket increases.
Even though the inflation outlook has improved recently, with Consumer Price Index (CPI) averaging 3.0 percent as of April 2025, numerous factors continue to weigh on employers’ ability to grant substantial salary hikes. Employers are affected by broader national and global economic conditions, their own business performance, market affordability, and trends within the labour market for skills.
While inflation is projected to remain within the South African Reserve Bank’s target range of 3 to 6 percent during 2025 and 2026, high interest rates continue to exert pressure. These rates keep borrowing costs elevated for both businesses and individual workers, adding further financial stress across the economy. This cocktail of pressures is forcing many organisations to reassess their workforce strategies, shifting emphasis from large pay increases to improving employee engagement and offering flexible work arrangements where possible.
Impact of Fuel Levies and Rising Costs
Although South Africa has avoided an increase to VAT for now, the rise in fuel levies will place an additional burden on both individuals and businesses. While some had hoped that declining fuel prices might offset this expense, such expectations are uncertain. The additional costs will likely impact company transport expenses and public service fleets.
Furthermore, rising food prices, exacerbated by droughts and other environmental factors, are set to place more strain on household and organisational budgets. These combined pressures on disposable income may lead to a softening of consumer spending in the months ahead, adding further challenges for sectors reliant on robust consumer demand.
Weaker GDP Growth and International Pressures
Employers must also navigate weaker than previously expected GDP growth for South Africa, along with international economic pressures. The volatility created by US President Trump’s fluctuating tariff policies is contributing to global uncertainty. Such tariffs on the country’s key trading partners could result in domestic inflationary pressures, making employers hesitant to commit to long-term increases in labour costs.
In this context, many businesses are adopting a wait-and-see approach, prioritising operational efficiency and risk management over aggressive payroll expansion.
Given these economic conditions, it is expected that employers will adopt a more restrained approach when it comes to adjusting salaries. Employees would be wise to consider other ways to enhance their overall compensation, rather than focusing solely on base pay increases. SARA representatives suggest that employees should review the entire structure of their remuneration packages. This includes not only direct pay, but also other benefits and rewards.
It can be helpful to enquire about options such as flexible retirement benefits and non-monetary incentives, which may assist in bridging any immediate financial gaps, while still supporting longer-term financial goals.
Conclusion
While South Africa’s workers have benefited from a modest real increase in earnings over the past year, the broader economic outlook remains uncertain. A combination of subdued GDP growth, international trade pressures, and rising living costs means that salary increases are likely to remain moderate throughout 2025. In this climate, employees should adopt a practical approach by considering the full value of their remuneration packages and seeking opportunities to enhance financial resilience through benefits and savings strategies.
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