In August, South Africans received less money in real terms as inflation continued to reduce workers' purchasing power. The average net wage fell to 21,622 rand.
According to the PayInc Net Wage Index, the nominal average net wage decreased by 0.1% compared to July (to 21,662 rand), but it remained 1.9% higher than a year ago. This index tracks the net wages of about 2.1 million South Africans whose income ranges from 5,000 to 100,000 rand per month.
However, when accounting for inflation, the decline was significantly sharper: real net wages decreased by 0.5% month-on-month, reaching 20,164 rand, which is 2.6% lower than a year ago. Over the year to date, average net wages have fallen by 2.1% and 2.6% in real terms, despite nominal wage growth of 1.6%.
Adverse Trend
Independent economist Eliza Kruger noted that after a rise in July, which was the first in nine months, the index fell by 0.5% in real terms. She emphasized that for households, this leads to an erosion of purchasing power, a reduction in discretionary spending, and decreased confidence.
Wage pressure is intensifying due to rising borrowing costs and forecasts of renewed inflationary pressure. PayInc reported that the benchmark interest rate increased by 0.5 percentage points this year, further burdening household budgets.
Furthermore, the expected new conflict in the Middle East is anticipated to push overall inflation above 5% in October and keep it high for several months. Kruger added that this expected upward trend and the risk of rising inflation expectations triggered another interest rate hike.
Sectoral Differences
National average figures also conceal significant differences in South Africans' incomes depending on their place of employment. According to the latest Quarterly Labour Force Survey from Statistics South Africa, the average gross monthly income in the non-agricultural formal sector was 32,828 rand in the first half of the year.
Workers in the wholesale and retail trade, construction, and manufacturing sectors earned less than the average across the entire economy. Most other sectors showed an average monthly income ranging from 37,107 rand in transport and communications to 39,492 rand in public, social, and personal services.
Above Average
However, workers in the electricity, gas, and water supply sectors significantly exceeded the average level, earning an average of 62,454 rand per month—approximately 90% more than the economic average. Internal data from Eskom showed that the company's average employee earned 941,933 rand per year, or 78,494 rand per month, while the median income was 858,580 rand per year, equivalent to 71,548 rand per month.
Incomes in the energy and water supply sectors also grew by 9% in the first half of the year compared to the same period last year, while the overall growth across the economy was 5.3%. Workers in the financial sector recorded the lowest increase at 3.5%.
Kruger concluded that these differences demonstrate that workers are experiencing the current economic situation very differently. Nevertheless, the broader PayInc Net Wage Index indicates persistent pressure, and rising inflation is likely to delay the recovery of real purchasing power.