South African Salaries Continue to Show Positive Growth

The most recent PayInc Net Salary Index reveals encouraging news for South African employees, showing that salaries across the country remain higher than they were in the previous year, indicating stronger financial capacity for spending as the festive season approaches. The index, which monitors the average nominal net salaries of approximately 2.1 million South African workers, recorded minimal change in October 2025, yet it continued to register growth when compared to the same period last year.

Key Takeaways

• Nominal salaries continue to rise: South African workers saw their average nominal net salary reach R21,414 in October 2025, maintaining a 1.8% year-on-year increase, signalling stronger spending power ahead of the festive season.
• Real salary growth is modest but positive: Adjusted for inflation, real net salaries dipped slightly month-on-month but are still up by 1.0% compared with the first ten months of 2024, reflecting moderate growth in purchasing power despite rising consumer inflation.
• Job creation is happening, but slowly: Additional salaries and data from Stats SA show new employment opportunities, yet economic growth of around 1%-1.3% per annum limits the ability to absorb all new entrants into the job market, highlighting the need for productivity improvements.

Real Salaries Show Slight Decline Due to Inflation

When adjusting for inflation, the real net salary index experienced a minor decline of 0.2 percent from the previous month, settling at R20,685 in October 2025. This marks the fourth consecutive month in which real net salaries have fallen below the levels observed in the corresponding period of the previous year.

This decline in real wages reflects a gradual rise in consumer inflation, which increased from 2.7 percent in March to 3.6 percent by October, placing some pressure on the purchasing power of employees.

Despite this monthly decline, considering the average consumer inflation of 3.2 percent in the first ten months of 2025, real net salaries have still risen by 1.0 percent compared with the same period in 2024, highlighting sustained, moderate growth in household earnings over the year.

Upward Trends in Nominal Salaries

The growth in nominal salaries continued throughout 2025, with average nominal net earnings rising by four percent during the first ten months of the year, compared with a 4.6 percent increase in the same period in 2024.

Industry research indicates that the average salary adjustment in 2025 is approximately five percent, which implies that South African workers are likely experiencing a real increase in earnings for the second consecutive year, further enhancing their spending capacity.

Economists have projected that the average rate of consumer inflation in 2025 will stabilise around 3.2 percent, which is notably lower than the 4.4 percent inflation observed in 2024.

Employment Growth Remains Modest

Analysis of the PayInc data also suggests that additional salaries were disbursed during 2025, implying that the economy has created new employment opportunities.

Supporting this, Statistics South Africa’s Labour Force Survey reported that 248,000 jobs were created in the third quarter of the year. However, year-on-year job growth slowed to 109,000 positions, closely matching PayInc findings, which indicate that a cumulative total of 125,000 additional salaries were paid over the first ten months of 2025.

Although this trend is positive, the current economic growth rate of approximately one to 1.3 percent per annum is insufficient to absorb all new entrants into the labour market, limiting the overall impact of job creation on unemployment levels.

Productivity Growth Lags Behind Salary Increases

Another concern for businesses is the persistent low growth in productivity, which continues to place upward pressure on operating costs. Productivity improvements are therefore seen as essential for sustainable business performance.

Labour productivity growth in the formal non-agricultural sector has slowed slightly, declining from 1.2 percent in the fourth quarter of 2024 to 1.1 percent in the first quarter of 2025. Similarly, year-on-year growth in non-agricultural output moderated, while employment levels remained broadly unchanged.

Growth in nominal unit labour costs in the formal non-agricultural sector also eased, falling from 3.3 percent in the final quarter of 2024 to 3.0 percent in the first quarter of 2025. In addition, total remuneration growth slowed more rapidly than output growth in the non-agricultural sector, pointing to ongoing challenges in balancing wages with productivity.

An increase in productivity remains a critical factor for improving company profits, supporting business expansion, and facilitating further job creation in the long term.

Conclusion

South African workers are experiencing a cautiously optimistic outlook, with nominal salaries continuing to rise and real earnings showing modest year-on-year growth despite inflationary pressures. Household spending is benefiting from these increases, supporting stronger consumption during key shopping periods, while incremental job creation indicates slow but positive labour market improvements. However, persistent low productivity growth and limited economic expansion underscore the need for businesses to enhance efficiency and for workers to seek skills development, ensuring that wage growth translates into sustainable economic and personal financial gains in the long term.