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South African net salaries improved marginally in real terms in July, the first increase in nine months ― though they remain constrained by economic pressures, which are also restricting households’ purchasing power.The report by national payments utility PayInc shows nominal salaries increased by only 1.6% during the first seven months of 2026 compared with a 3.7% increase for the whole of 2025, attesting to the ongoing strain in the labour market.The index, which tracks the take-home pay of about 2.1-million South African wage earners, ticked up 0.2% month on month to R21,642 in nominal terms in July and was up 2.2% compared with a year ago.It was also up 0.4% at R20,269 when factoring in inflation, though this was a 2.2% year-on-year decline.The month-on-month improvement in real salaries reflected a slowdown in consumer inflation to 4.3% in July from 5% in June, which Stats SA attributed to softer inflation for food and nonalcoholic beverages, lower municipal tariff increases and a decline in fuel prices.But while the continued increase in nominal net salaries is encouraging, the broader picture shows that salary growth remains subdued, independent economist Elize Kruger said.“South African households continue to navigate a challenging economic environment, making the recovery in purchasing power particularly important for consumer confidence and spending,” she said.PayInc’s year-to-date statistics suggest that net salaries are down by 2.1% in real terms.“The moderating inflation provided some breathing room for salary earners in July and contributed to the first monthly improvement in real net salaries in nine months. However, purchasing power remains weaker than a year ago and this continued erosion has implications for household spending and consumer confidence,” said Kruger.The inflation relief could also prove temporary, with renewed geopolitical tensions in the Middle East keeping global oil prices volatile, raising the prospect of higher domestic fuel prices.While the labour market remains strained in general, there are notable discrepancies between different sectors in the economy, between unionised and nonunionised sectors and between the private and public sectors, PayInc said. It cited South African Reserve Bank data which shows average salary increases in the private sector moderated to 4% in 2025 from 4.1% the previous year. This was below the average of 5.4% recorded for 2022 and 2023. In the public sector, the average increases in remuneration were 8.6% and 9.1% in 2025 and 2024, respectively, compared with only 1.6% and 0.2% in 2023 and 2022. “Year-to-date indications from the PayInc net salary index signal a challenging year in the making for salary earners,” PayInc reiterated.“Not only will nominal increases likely be lower than in 2025, given the economic pressures manifesting in the real economy, but the higher inflation trajectory continues to erode the purchasing power of earnings.” An annual report by short-term lender Wonga on Wednesday showed that nearly a third of South Africans are resorting to borrowing from informal lenders, often for household essentials, as the cost of living rises.The survey of 4,872 respondents from across the country found that 41% use credit every month for essentials such as groceries, transport and electricity while 32% have borrowed from informal lenders in the past 12 months.“Most South Africans are unable to have their basic needs met without relying on credit. This creates a dangerous cycle of debt reliance and overindebtedness, which fosters an environment where people are not empowered to save or plan,” Wonga spokesperson Tina Manyanya said. Most respondents did not have immediate access to savings equivalent to one month’s salary, with half turning to credit as a shock absorber in the face of unplanned emergencies.“It is alarming to see that South Africans have to rely on credit when faced with an unexpected medical or repair cost, making a financially bad situation worse and further perpetuating the cycle of indebtedness,” Manyanya said.Business Day
