South African Wage Increases Outpace Inflation but Remain Insufficient, Survey Finds

South African wages lag behind soaring cost of living, driving high indebtedness; employers innovate benefits to combat crisis.

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South African Wage Increases Outpace Inflation but Remain Insufficient, Survey Finds

South African Wage Increases Outpace Inflation but Remain Insufficient, Survey Finds

A survey conducted by News24 on April 25, 2024, reveals that while South African wage increases have surpassed inflation rates, they fall short of keeping up with the rising cost of living. The Household Affordability Index, which monitors the prices of 44 essential food items from 47 supermarkets and 32 butcheries across six cities, indicates that the average cost of the household food basket rose by 6.2% in April 2024 compared to the same month in the previous year.

The increase in food prices was primarily driven by higher vegetable costs, with onion prices elevating the cost of food. The Johannesburg basket experienced the most significant increase, attributed to elevated prices for staple foods such as maize meal, rice, flour, sugar, beans, and bread. Durban and Cape Town baskets also saw price hikes, albeit to a lesser degree.

The General Industries Union of South Africa (Giwusa) expressed concern over the high cost of living and its impact on the working class and the poor, emphasizing that the crisis is far from over. According to the managing director of Remchannel and the head of strategy at Old Mutual Corporate Consultants, although salary increases are aligning with the Consumer Price Index (CPI) for the first time since 2020, the actual cost of living is escalating at an even faster rate.

This disparity is leading to high levels of indebtedness among employees, as the cost of necessities like food, electricity, and transport is outpacing both inflation and salary increases. To address this issue, employers are re-evaluating their employee value propositions and developing innovative benefits and perks, such as earned wage access, 'soft loans' with more favorable terms, and flexibility in retirement contribution plans. Additionally, employers are increasingly adopting hybrid work models to promote employee well-being and attract skilled professionals in a competitive market.

Why this matters: The widening gap between wage increases and the rising cost of living in South Africa has far-reaching implications for the country's socio-economic stability. As more South Africans struggle to make ends meet, it becomes crucial for policymakers and employers to collaborate on solutions that ensure fair wages and access to essential goods and services.

The Pietermaritzburg Economic Justice and Dignity Group (PMBEJD) has highlighted that the R80 increase in child support grants over the past four years has been insufficient to cover the rising cost of living. Despite the child support grant being raised to R530 per month in April 2024, the PMBEJD argues that the R20 increase falls short of the R68 rise in the cost of feeding a child over the past year. The group also noted that the R80 boost in grants over the last four years is significantly lower than the R200 increase in food costs they have observed. The PMBEJD's latest food basket data shows that some pantry essentials, fruits, and eggs continue to exhibit double-digit price increases, underscoring the persistent rise in <a href="https://www.iol.co.za/business-report/economy/household-food-basket-rose-higher-than-inflation-rate-in-april-6581e124-d5c7-4b0f-

Key Takeaways

  • South African wage increases lag behind rising cost of living, up 6.2% in April 2024.
  • Vegetable prices, especially onions, drive higher food costs, with Johannesburg seeing largest hike.
  • Salary increases align with CPI, but actual cost of living escalates faster, leading to high debt.
  • Employers offer innovative benefits like earned wage access, 'soft loans' to combat rising costs.
  • Child support grants fail to keep pace with 68% rise in cost of feeding a child over past year.