Defining who qualifies as ‘middle class’ is a challenging task in South Africa, given the significant disparity between the haves and have-nots.
There is currently no official definition of the middle class, and this is likely because determining who falls within the classification is challenging as its definition must be considered in the context of the whole population.
With an unemployment rate of 32.9% in the first quarter of this year, even those who earn R1 per month through a job are considered part of the 16.2 million employed.
According to Stats SA, the average monthly salary in South Africa’s formal sector, often used as an indicator of the middle class, currently stands at R26,894.
The most recent data from the quarterly employment survey conducted by the statistics agency shows a 1.6% increase from the third quarter of 2023 when it was approximately R26,500.
This new average salary reflects a 2.3% increase from the same quarter in 2022 when it was R26,300.
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.
In its latest Credit Stress Report, 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.
The report states that this category includes 4.1 million income-earning, credit-active people with families, mortgages, and frequent shopping trips.
Similarly, the Bureau for Economic Research (BER), in its latest report on consumer confidence, considers a household with earnings between R5,000 and R20,000 per month a middle-income household.
However, Discovery Bank expanded this range slightly further, highlighting in its SpendTrend 2024 report that mass affluent (middle-income) individuals are those who earn between R100,000 and R350,000 a year.
This works out to between 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.
Averaging out the estimates presented by multiple sources, the middle class in South Africa can be regarded as those who earn an income of roughly just above R20,000 per month.
Despite the varying criteria used to define the middle class, all the various authorities point to a common reality, and that is, this segment is currently experiencing significant financial pressure due to soaring food prices, power outages, and substantial interest rate hikes since November 2021.
Since the beginning of the rate cycle in late 2021, interest rates have been raised by 425 basis points, making it increasingly challenging for middle-class South Africans to manage their loans, particularly those tied to their most significant assets, such as their mortgages and vehicle financing.
Debt levels for South Africans earning more than R20,000 a month are reaching record levels, where households are now spending two-thirds of their income paying off debt.
The latest DebtBusters Debt Index for the first quarter of 2024 shows that persistently high interest rates and inflation—especially food inflation—continue to erode consumers’ disposable income, while a lack of meaningful economic growth is constraining salaries.
DebtBusters indicates that these financial pressures are compelling individuals in the middle to lower-income brackets to adopt more frugal spending habits and reconsider their credit usage.
Despite the efforts of researchers and economists to define the middle class in South Africa, the task is far from straightforward.
