The average salary increase this year was 5.43% – comfortably above inflation. Yet those same workers are tapping pensions to buy groceries and walking out of jobs at the fastest rate since Covid.

he numbers, on paper, say South African workers are doing fine. The reality says something else.

The average salary increase this year was 5.43%, according to the April 2026 Remchannel Bi-Annual Salary and Wage Movements Survey. That compares with 2025’s average inflation of 3.2%. By that arithmetic, most households should be better off.

Then look at what those workers are actually doing.

Two-pot retirement withdrawals – a system that kicked in during September 2024 to give members access to a portion of their savings in an emergency – keep climbing. By March 27, less than a month since the new tax year opened, Alexforbes had received more than 210,000 savings-pot claims, matching the volumes recorded when the system launched. Its data show 67% of members who claimed in 2025 came back in 2026, and 31% of those claimants have now withdrawn across all three tax years since the system began.

“Across age, income and gender groups, we are seeing large numbers of people accessing their savings pot primarily for basic living expenses,” Lindiwe Sebesho, MD of Remchannel and one of the authors of the report, tells Currency. “People are under enormous pressure on disposable income.”

Old Mutual Corporate’s latest withdrawal survey shows March 2026 claims returned to near inception-level volumes, with about 100,000 recorded by month-end, says Thiru Govender, principal consultant at Old Mutual Corporate Consultants. Among lower-income members, basic living needs alone accounted for 45% of withdrawals. Across all income bands, the leading reasons were essentials, emergencies and debt.

“That pattern shows how deeply financial pressure is embedded in employees’ day-to-day lives,” she says. “For employers, the question is whether pay, benefits and wider support are aligned to where employees are feeling the most strain. Two-pot withdrawal data gives employers a valuable signal of where current support may be falling short.”

The cost of living

Household debt is now close to two-thirds of disposable income, at 61.8% in the fourth quarter of 2025 – even though the cost of servicing that debt has declined thanks to five interest rate cuts totalling 150 basis points over the past 18 months.

About 90% of employers anchor their salary increases directly to headline CPI. The trouble is that for most workers, day-to-day living costs feel considerably higher than the headline figure suggests. Without clear communication from businesses about what they can afford, what is sustainable and how the increase compares with prevailing prices, even an above-inflation raise of 5.43% fails to register under cash-flow strain. Psychologically, employees feel poorer rather than better off.

Especially with all the negative news in the world right now. Brent crude has surged more than 40% since US and Israeli airstrikes against Iran at the end of February, sending domestic diesel and petrol prices to record highs. The energy shock is delaying hopes of further interest rate relief, and could put rate hikes back on the South African Reserve Bank’s table if the conflict persists.

That pressure is being compounded by a quiet restructuring of corporate safety nets. As businesses absorb their own rising operational costs, traditional workplace provisions – soft loans, cash advances, fully paid maternity leave – are being phased out or minimised in favour of performance-linked reward structures.

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