Africa-Press – South-Africa. The PayInet Net Salary Index rose in January, with PayInc optimistic about real wage increases for workers in South Africa.
The index tracks the nominal net salaries of an estimated 2.1 million salary earners in South Africa.
“The average nominal salary was R21,506 in January 2026, representing a 2.2% growth from last year’s level,” said Shergeran Naidoo, Head of Stakeholder Engagements at PayInc.
Although still early in the year, PayInc said that the data indicate that the upward trend in net salaries since 2024 has continued into 2026.
The increase in salaries stems from the gradual improvement in economic activity and the economy’s resilience despite several challenges.
Given the moderate increase in consumer inflation, the PayInc Net Salary Index declined by 1.4% year on year in real terms, but remained flat month on month in January at R20,644.
“With average consumer inflation forecast to remain moderate at 3.5% in 2026, following the 21-year low of 3.2% in 2025, even a modest salary adjustment could see a real increase in remuneration in 2026,” said economist Elize Kruger.
Salary earners will now be turning their attention to see if there are any tax reliefs ahead of the 2026 National Budget, which will be delivered by Finance Minister Enoch Godongwana tomorrow.
Over the last two fiscal years, tax brackets were not adjusted for inflation, which resulted in salary earners receiving an increase being pushed into a higher tax category.
This effectively results in many paying a higher tax rate and forfeiting part of their increase to the taxman.
SARS said that not changing the tax brackets could add R15.5 billion in additional tax revenue in FY26.
Focus on the budget
South Africa’s fiscal situation has improved over the last year, with record-high commodity prices fuelling corporate tax receipts.
The stronger rand and lower government bond yields have also meaningfully reduced the cost of debt.
National Treasury is thus expected to beat its FY25/26 budget deficit target as seen in the Medium-Term Budget Policy Statement.
With fiscal consolidation moving faster than expected, the National Treasury is expected to scrap some of the additional tax measures reflected in the medium-term estimates.
Kruger said that this includes the R16.5 billion to be earned from bracket creep in FY27.
The main focus of the 2026 Budget will thus be on the estimated size of the commodity windfall and the government’s plan to spend this.
“With SA’s debt at elevated levels, and trending sideways around 77%-78% of GDP, a prudent strategy should be in place to reduce the level of government debt, which will have the added benefit of also reducing the cost of debt,” said Kruger.
“The latter has already benefited from a stronger rand exchange rate, which reduces the value of South Africa’s foreign debt, as well as a notable drop in government bond yields.”
She noted that the government is likely to take a hybrid approach, reducing the funding requirement somewhat.
This will see some of the commodity windfall spent on pressing expenditure priorities, thereby softening pressure for tax hikes.
Higher precious metal prices and stronger terms of trade should positively influence the near-term fiscal outlook.
There should be a smaller budget deficit in FY26/27, a larger primary surplus, and sustained fiscal consolidation over the forecast horizon.
FY27 is expected to be the third straight year where South Africa records a primary surplus, where tax revenue exceeds the country’s non-interest expenditure, reducing the shortfall to be borrowed.
“A continuing trend of primary surpluses should bode well for ratings agencies’ perception about fiscal management in South Africa,” said Kruger.
“With the number of positive economic developments building, a budget reflecting prudent fiscal management will bode well for confidence levels in South Africa,” ends Kruger.
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