Take-home pay increases significantly in 2024

Employed South African’s take-home pay increased significantly in 2024, while the data for December also points to a marked upswing for take-home pay and a continuing turnaround for earnings.

According to BankservAfrica’s Take-home Pay Index (BTPI), which tracks the average nominal take-home pay of an estimated four million salary earners in South Africa, the BTPI closed December 2024 on a high note, showing a continuation of the growth observed throughout the year.

“The average take-home pay increased by 11.9% year-on-year to reach R17 202 in December 2024, a significant leap from the R15 367 recorded in December 2023,” Shergeran Naidoo, BankservAfrica’s head of stakeholder engagements, says.

He says 2024 was a year of stronger salary growth driving retail spend, while the upward momentum in average salaries was evident throughout the year, despite some monthly volatility.

“The BTPI consistently highlighted 2024 as the strongest salary year since 2020. The positive shifts in the nominal take-home pay were buoyed by the recovering business environment, load shedding suspension, moderating inflation, new political landscape and two repo rate cuts,” Elize Kruger, an independent economist, says.

“Additionally, company profitability improved further in 2024, evidenced by a gross operating surplus increase that exceeded the average inflation rate.”

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Average take-home pay increased by 7.9% in 2024

The average nominal take-home pay increased by 7.9% in 2024, the highest growth in years. However, Kruger points out, this increase comes from a low base, as 2023 as well as 2022 were dismal years for take-home pay.

With inflation moderating notably during 2024, salary earners were better off in real terms in 2024, she says.

“This recovery in disposable income was reflected in healthier retail sales growth. Real growth for the eleven months to November 2024 was 2.4% higher than the corresponding period in the previous year, while passenger car sales also recorded positive growth in 2024,” Kruger says.

In real terms, take-home pay also tracked higher at R14 887 in December 2024, markedly up by 8.7% on year-ago levels. The substantial easing of consumer inflation in 2024, averaging 4.4%, the lowest rate since 2020, positively impacted salary earners’ buying power. In 2024, actual take-home pay averaged R14 292, up by 3.1%, showing the first increase since 2020.

Kruger says salaries are expected to stay buoyant in 2025.

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Better economic outlook could see better take-home pay

“On the economic front, real gross domestic product (GDP) growth is forecast to increase by 1.7% in 2025, somewhat higher than in 2024, driven by a combination of improved household consumption expenditure, higher fixed investment spending and advances in structural reforms.”

Regarding structural reforms, Kruger says an ongoing focus on improving South Africa’s electricity generation capacity, addressing supply chain blockages relating to freight rail and port operations and upgrading water infrastructure will help drive the economy.

“The anticipated improvements could see companies offer more substantial salary increases in 2025. The improving buying power seen in 2024 will also likely continue into 2025, providing valuable relief to cash-strapped households and support for consumer spending.”

Consumer inflation moderated notably in 2024, from 5.3% in January to ending the year at 3%. Kruger says that with an average headline inflation of 4.4% in 2024 and an expectation of a similar average of 4.2% in 2025, multiple years of real increases in average salaries are expected, leaving more room for spending. 

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Sarb says take-home pay increased 5.2% in first half of 2024

According to the latest Quarterly Bulletin of the South African Reserve Bank (Sarb), the average nominal salary increase in the first half of 2024 was 5.2% compared to a full-year average of 4.5% in 2023.

Assuming a 1.5% real increase and average consumer inflation of 4.2% are realised, average salary increases could be around 5.7% in 2025, according to Kruger.

“However, this will depend on the employer’s financial health, the employee’s performance and talent retention goals. With all these positive movements, looking ahead to 2025, salaries are expected to continue building on the gains achieved in 2024,” ends Kruger.