Middle Class in South Africa Resilient Despite Economic Challenges

While defining the middle class in South Africa can be complex given the country’s economic disparities, recent data suggests this segment remains resilient in the face of ongoing challenges.

Despite an unemployment rate of 32.9% in Q1 2024, the average monthly salary in South Africa’s formal sector, often used as an indicator of middle class status, has seen steady growth. According to Stats SA, the average salary stood at R26,894 in Q1 2024, a 1.6% increase from Q3 2023 and a 2.3% rise from the same period in 2022.

Other research bodies, such as the University of Cape Town’s Liberty Insitute of Strategic Marketing, argue that those earning roughly R22,000 make a household middle class. The Bureau for Economic Research (BER) considers a household with earnings between R5,000 and R20,000 per month a middle-income household.

Middle Class Adapting to Economic Pressures

While the middle class is experiencing significant financial pressure due to factors like soaring food prices, power outages, and interest rate hikes, they are demonstrating resilience and adaptability.

Since late 2021, interest rates have been raised by 425 basis points, making it challenging for middle-class South Africans to manage loans tied to major assets like mortgages and vehicle financing. However, the latest DebtBusters Debt Index for Q1 2024 shows that individuals in the middle to lower-income brackets are adopting more frugal spending habits and reconsidering credit usage to navigate these challenges.

Bright Spots for the Middle Class

Despite the economic headwinds, there are bright spots for the middle class. The latest Credit Stress Report by research and analytics firm Eighty20 defines middle-class workers as households with an income of nearly R25,000 a month and a personal income of R15,000, encompassing 4.1 million income-earning, credit-active people with families, mortgages, and frequent shopping trips.

Discovery Bank’s SpendTrend 2024 report highlights that mass affluent (middle-income) individuals are those who earn between R100,000 and R350,000 a year, or R8,000 to R29,000 per month, which is in line with the South African Reserve Bank’s (SARB) estimated range of the South African middle class.

Resilience and Adaptability Key for Middle Class

While defining the middle class in South Africa remains a complex task, the data suggests this segment is demonstrating resilience and adaptability in the face of economic challenges. By adopting frugal spending habits, reconsidering credit usage, and leveraging available resources, the middle class is poised to navigate the current economic landscape and continue contributing to South Africa’s economic growth and development.