A recent warning from Standard Bank highlights the deepening financial crisis among South Africa’s working-class population, who remain burdened by debt and unable to transition into the middle class despite earning stable incomes. Rising costs, stagnant wages, and an unforgiving economy have turned financial progress into an uphill battle, trapping millions in a cycle of debt and survival mode.
Key Takeaways
- Debt is a Major Barrier to Financial Progress: Despite rising incomes and spending power, South Africa’s working class remains trapped in a cycle of debt, with over 55% defaulting on at least one loan. Even middle-class households earning above R22 000 per month are burdened with heavy debt repayments, consuming nearly 70% of their income.
- The Cost of Living is Outpacing Wage Growth: Inflation, fuel prices, and electricity tariffs have skyrocketed over the past decade, with costs increasing by more than double while salaries have risen by just 98%. Essentials like food, housing, and transport eat up most of workers’ earnings, making it difficult for individuals to save or progress financially.
- Economic Growth Hasn’t Translated Into Financial Stability: While the working-class segment has expanded by 67%, and spending power has nearly doubled, many remain financially stagnant. Rapidly growing debt, high living costs, and stagnant wages prevent upward mobility, leaving millions struggling to transition into the middle class.
South Africans classified as working class typically earn between R8 000 and R22 000 per month, with the R22 000 threshold marking the entry point into middle-class status. However, many individuals within this income bracket face financial constraints that prevent them from progressing further. The so-called ‘gateway to financial stability’ remains a mirage for most, as the cost of living continues to skyrocket while wages barely shift.
While a large portion of the working-class population holds tertiary qualifications and, in some cases, dual incomes, they still find it difficult to surpass the R22 000 monthly income level. The lack of financial mobility is primarily driven by South Africa’s sluggish economic growth, rising debt levels, and constrained resources, according to Motlatsi Mkalala, Executive Head of Middle Market at Standard Bank.
The challenges experienced by this segment contrast sharply with positive strides in poverty reduction and the increasing number of South Africans moving from lower-income brackets into the working class. But while the statistics may paint a picture of progress, the reality for millions is far more grim—an economy that fails to create sustainable opportunities, employers that refuse to offer meaningful wage increases, and a financial system that profits from their struggles.
Rapid Growth in the Working Class
Despite financial difficulties, South Africa’s working-class segment has experienced significant expansion over the last decade. Research conducted by the UCT Liberty Institute of Strategic Marketing, in collaboration with Liberty and Standard Bank, indicates that the working-class population has grown by 67%, increasing from 9 million people in 2012 to approximately 15 million in 2022. While this growth signals a shift in demographics, it also highlights a disturbing reality—millions more South Africans are stuck in a financial limbo, earning just enough to get by but not enough to truly thrive.
According to Standard Bank’s findings, approximately 300 new working-class households emerge daily, highlighting the rapid expansion of this income group. But each new household enters an economy riddled with high costs, debt traps, and limited job security, making financial independence more of a dream than a reality.
The financial power of the working class has also increased dramatically. Mkalala noted that the segment’s total annual spending power has risen from R280 billion in 2012 to R550 billion in 2022, representing a 96% increase. Yet, for most, this spending power feels like a cruel illusion—what used to cover a comfortable lifestyle now barely stretches to meet basic needs.
Additionally, total wealth within the segment has nearly doubled over the same period. However, despite these improvements, many working-class individuals struggle to move beyond this income group due to persistent financial burdens. The numbers may have grown, but so has financial stress, leaving many wondering whether they will ever truly escape the paycheck-to-paycheck cycle.
| Working Class | 2012 | 2022 | Change |
|---|---|---|---|
| Population | 9 million | 15 million | +67% |
| Total Spending Power | R280 billion | R550 billion | +96% |
| Average Annual Income | R31 100 | R36 700 | +18% |
You might think that R20,000 per month is a comfortable income, but how does it compare to what other South Africans are earning? Find out in our latest report on New Average Salary in South Africa. This will help you benchmark your income and plan your finances more effectively.
Financial Pressures and Rising Costs
A major factor preventing upward mobility is the increasing cost of essential living expenses. Many individuals within this income group support extended families, which places further strain on their disposable income. Additionally, with inflation remaining high, a significant portion of earnings is allocated to necessities such as food, housing, and transport. Every trip to the grocery store or petrol station is a painful reminder that wages are failing to keep up with rising expenses.
Transport costs, in particular, have become a substantial financial burden. Many working-class individuals spend an average of two hours per day commuting, and for some, this figure has doubled, as have their transport expenses. The combination of increased travel time and rising fuel costs continues to erode disposable income, making it even more difficult to build financial stability. With fuel prices climbing and public transport options limited, many are forced to sacrifice other essentials just to keep moving.
Rising Debt Among South Africa’s Working Class
One of the most pressing issues facing working-class South Africans is the growing dependence on debt. Many individuals earning below R22 000 per month turn to credit facilities to manage financial pressures, often leading to chronic financial instability. The vicious cycle is simple: salaries are too low, expenses are too high, and the only way to stay afloat is to borrow—often at crippling interest rates.
Findings from the DebtBusters Debt Index and Eighty20’s Credit Stress reports indicate that financial strain among the working-class segment has remained persistent, with a significant number of individuals struggling to keep up with loan repayments. For many, debt is no longer a temporary solution but a permanent state of existence.
Eighty20’s data reveals that by the end of the third quarter of 2024, the number of credit-active working-class consumers had reached 8.3 million people, collectively holding credit balances amounting to R107.5 billion. The average monthly debt instalment for this group stood at R1 732, consuming 19% of their income. This means nearly one-fifth of their earnings vanishes before they even have a chance to put food on the table.
Despite a 3% decline in default rates across all lending products, an alarming 55% of the segment remains in default on at least one type of debt. The reality is that for over half of this group, financial distress is not just a statistic—it’s their everyday life.
Earning more money doesn’t automatically mean you’re financially secure. Before jumping into investments, you might want to consider whether it’s smarter to clear your debts first. Our guide on How to Use Your Bonus: Debt vs Investment breaks down the best approach to growing wealth while keeping your financial health in check.
The most common form of debt within this income group is unsecured credit, which includes personal loans and credit card debt. DebtBusters reports that unsecured debts account for between 58% and 78% of total debt for those earning between R5 000 and R20 000 per month, with the percentage decreasing as income levels rise. But with high-interest rates and limited financial literacy, escaping the grip of debt is nearly impossible for most.
When considering all financial obligations beyond just credit, individuals within this income bracket require 67% of their total income to cover debts, leaving little room for savings or discretionary spending. This means that after paying off their debts, most have barely enough left to survive—let alone save or invest.
Middle-Class Households Also Burdened by Debt
Although Standard Bank’s data suggests that middle-class households experience greater financial stability, with 69% reporting lower financial stress levels, they too remain heavily reliant on debt. The illusion of financial comfort quickly fades when looking at the numbers—debt is just as prevalent among middle-class earners, if not worse.
DebtBusters data reveals that households in the middle-income bracket with earnings ranging from R22 000 to R35 000 require 69% of their income to service debts, a rate that mirrors the struggles of the working-class population.
Over the past decade, South Africans across income groups have faced sharp increases in essential costs, further exacerbating financial difficulties.
- Inflation has surged by 144%
- Petrol prices have risen by 172%
- Eskom’s electricity tariffs have soared by 235%
Meanwhile, salaries have not kept pace, increasing by just 98% over the same period. In a country where essential costs climb at breakneck speed while wages crawl forward, financial freedom remains out of reach for millions.
Conclusion
South Africa’s working-class population continues to grow, yet financial struggles remain deeply entrenched. Despite an increase in incomes and spending power, the reality for millions is that debt and rising costs keep them financially stagnant. Many are forced to borrow just to survive, while middle-class households are equally burdened by loans and repayments. Without meaningful wage growth, economic reforms, and greater financial education, escaping this financial trap will remain nearly impossible for most South Africans.
Fast, uncomplicated, and trustworthy loan comparisons
At Arcadia Finance, you can compare loan offers from multiple lenders with no obligation and free of charge. Get a clear overview of your options and choose the best deal for you.
Fill out our form today to easily compare interest rates from 16 banks and find the right loan for you.
