The third quarter of 2024 brought good news for workers in South Africa: average salaries rose significantly, reflecting resilience in certain key industries.
However, the wage growth coincided with concerning job losses, painting a mixed picture of the country’s economic landscape.
Let’s explore the details behind the numbers, including sectoral trends, employment changes, and the broader implications for South Africa’s workforce.
Highlights of Q3 2024 Salary Growth
| Metric | Value (Q3 2024) | Growth Rate |
|---|---|---|
| Average Monthly Salary | R28,220 | 2.6% (QoQ), 6.6% (YoY) |
| Basic Salaries & Wages | R878.2 billion | 0.8% (QoQ) |
Stats SA’s Quarterly Employment Statistics (QES) survey revealed that:
- Quarter-on-quarter (QoQ): Salaries rose from R27,511 in Q2 2024 to R28,220 in Q3 2024.
- Year-on-year (YoY): Compared to Q3 2023, salaries increased by 6.6%, marking one of the strongest improvements in recent years.
What’s Driving Wage Growth?
- Sector-Specific Performance: Trade, mining, and manufacturing sectors experienced increased productivity, leading to higher wages.
- Inflation Adjustments: Rising costs of living prompted wage adjustments across various industries.
- Collective Bargaining: Labor unions successfully negotiated higher wages in key sectors.
Industry-Wise Breakdown of Wage Growth
Sectors Experiencing Growth
- Trade Industry: Benefited from robust retail activity and increased consumer spending.
- Mining and Manufacturing: Gained from favorable commodity prices and productivity improvements.
- Business Services: Saw modest salary increases despite job reductions.
- Construction and Transport: Showed gradual recovery, reflected in modest wage growth.
Notable Performances
- Mining: Strong global demand for commodities drove higher payouts.
- Trade: Seasonal retail activity and higher consumer confidence boosted wages.
Sectors Facing Declines
- Community Services: A key sector encompassing education, healthcare, and public administration saw wage stagnation and job losses.
- Electricity Sector: Reported minimal wage growth, impacted by operational inefficiencies.
The community services sector’s decline is particularly concerning, as it directly affects essential public services critical to societal well-being.
Employment Trends in Q3 2024
Despite rising wages, total employment in the formal non-agricultural sector dropped by 133,000 jobs, bringing the workforce down to 10.6 million.
Employment Changes by Sector
| Sector | Jobs Lost (Q3 2024) | Jobs Gained |
|---|---|---|
| Community Services | 131,000 | – |
| Business Services | 15,000 | – |
| Manufacturing | 4,000 | – |
| Transport | 3,000 | – |
| Mining | 2,000 | – |
| Electricity | 1,000 | – |
| Trade | – | 19,000 |
| Construction | – | 4,000 |
While sectors like trade and construction created jobs, major losses in community services and business services underscore uneven growth.
Full-Time Employment Decline
Full-time employment fell slightly:
- Q2 2024: 9,468,000 jobs.
- Q3 2024: 9,454,000 jobs (-14,000).
This shift toward precarious employment could destabilize the workforce, as full-time jobs often provide better financial security and benefits.
Challenges Despite Salary Growth
High Unemployment
South Africa’s overall unemployment rate remains a pressing issue, exacerbated by declining formal sector jobs.
Sectoral Imbalances
Wage growth is concentrated in specific industries, while sectors like community services and electricity continue to underperform.
Economic Pressures
While higher wages help offset inflation, they can also drive operational costs for businesses, potentially impacting long-term growth and real income gains.
Structural Issues
Persistent challenges like power shortages, skills mismatches, and fluctuating global demand hinder comprehensive recovery.
Factors Contributing to Salary Growth
- Inflation-Linked Adjustments: Wages increased to keep pace with rising costs of goods and services.
- Sector-Specific Gains: Export-driven industries like mining capitalized on favorable global conditions.
- Skilled Labor Demand: Specialized industries offered higher pay to attract and retain skilled professionals.
Outlook and Recommendations
Sustaining Wage Growth
To maintain wage increases, South Africa needs to:
- Address structural challenges in underperforming sectors like community services.
- Support industries that show strong growth potential, such as trade and mining.
- Enhance labor market inclusivity to ensure gains benefit a broader range of workers.
Tackling Employment Declines
Strategies to counteract job losses include:
- Investment in Job Creation: Incentives for businesses in high-growth sectors.
- Upskilling Programs: Training workers for in-demand industries.
- Economic Reforms: Addressing systemic issues like energy shortages and regulatory barriers.
Balanced Economic Recovery
A sustainable recovery requires targeted interventions to balance wage growth with employment stability.
Policymakers and industry leaders must work together to foster inclusive growth across all sectors.
By addressing these challenges, South Africa can build on its wage growth momentum while creating a more secure and equitable labor market.
