Salaries in South Africa under pressure
New data reveals that South African households had a tough financial year in 2023. Job losses were the main reason for the decrease in income for many South Africans, along with other factors.
In late 2023, TransUnion's survey found 10 factors affecting South African household income. We conducted this survey until the end of the year.
Here are the stats:
- 34% saw an increase in average salary / income
- 44% of households indicated their incomes remained unchanged
- 22% reported a reduction.
The varied results indicate the diverse financial environment we are functioning in.
Consumers stayed positive despite economic challenges like high inflation and the possibility of interest rate hikes.
Based on the report 74% expected an increase, 20% didn't expect any change and 6% expected a decrease income.
Gen Z and Millennials showed optimism in their finances over the next 12 months.
It is clear that there are a lot of South Africans that remain optimistic and are showing true grit and resilience as they battle out the economic challenges. One of the areas of concern is debt and the management thereof, this is an area most consumers are urged to practice caution with.
Income Growth in 2023 can be attributed to:
New Businesses 16%
Higher Salaries 14%
Most of the decline can be attributed to Job losses at 23% and lower wages 17%.
These factors showed the fragile balance between career advancement, economic security and the role of entrepreneurship in improving financial well-being.
The 10 factors that impacted salaries in South Africa:
- Lost Job 23%
- Wage/Salary Reduced 17%
- Started new business 16%
- Wage/Salary increased 14%
- Work hours reduced 13%
- Started new job 12%
- Received unemployment benefits or subsidies
- Small businesses that closed or had a reduction in income 10%
- Quit or left job 6%
- Retired 4%
In the past three months, consumers changed their budget plans. 29% paid off debts faster, 25% saved more for emergencies or group savings, and 18% saved more for retirement.
Over the next three months, almost half of the population (47%) plans to reduce their spending on non-essential items. Additionally, 38% of people intend to shop less overall and avoid purchasing expensive items.
51% of Gen X and 56% of Baby Boomers planned to make big cuts in discretionary spending. 34% of the respondents planned to use their savings to pay bills and loans. Additionally, 31% intended to make partial payments to meet their obligations.
South Africans are resilient and with the potential easing of interest rates by the reserve bank and inflation on the horizon there should be an increase in economic activity and therefore disposable income of households.
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