South Africa’s already strained labour market could face another setback if fuel prices continue climbing, with higher energy and transport costs threatening to squeeze businesses and complicate wage negotiations.
Bongani Motsa, chief economist at the Minerals Council South Africa, said fuel prices were likely to remain substantially above levels recorded before the war-related energy shock, despite some recent easing.
October fuel prices are expected to rise by an average of R3.12 a litre for 95 petrol, R2.93 for 93 petrol, R2.73 for diesel 0.05% and R3.13 for diesel 0.005%.
The warning comes as fresh employment figures point to continued weakness in the economy.
Statistics South Africa data show that formal non-agricultural employment fell by 16,459 jobs between the first and second quarters of 2026. Employment declined from about 10.44 million workers to 10.42 million over the period.
The losses were concentrated in sectors including manufacturing, finance, trade and transport.
Several industries, however, recorded gains. Community services added 29,578 jobs, while construction increased employment by 1,412, mining by 1,002 and utilities by 128.
Mining employment reached 472,804 workers in the second quarter, compared with 471,802 in the first quarter. The increase was notable because mining GDP contracted by 3% quarter on quarter during the same period.
Fuel costs threaten to widen the squeeze
Motsa said the impact of elevated fuel prices extends well beyond filling stations. Diesel is a crucial input for mining, transport, manufacturing and agriculture, meaning sustained increases can raise costs throughout the economy.
Diesel prices are expected to remain roughly 42% to 43% above March 2022 levels, while petrol prices could be around 32% higher. Paraffin prices are projected to remain nearly 48% above their pre-war benchmark.
Higher fuel bills raise transport and logistics expenses, which can then move through supply chains and contribute to higher consumer prices.
For companies, the pressure is more direct: rising operating costs can eat into margins, restrict room for wage increases and make employers more cautious about adding staff.
A weaker rand or another increase in international oil prices could intensify those pressures, particularly for businesses already dealing with subdued productivity.
That could make wage negotiations more difficult as employees push for higher pay to offset living-cost increases while employers attempt to contain expenses.
Mining continues to offer higher pay
Despite the employment pressures, earnings have continued to rise in nominal terms across most parts of the economy.
Average monthly earnings per worker increased 4.1% year on year, reaching R30,611 in May 2026 from R29,402 a year earlier.
With consumer inflation averaging 3.2% in 2025, overall earnings growth remained slightly ahead of inflation, indicating a modest improvement in purchasing power.
Mining continued to stand above the economy-wide average. Average monthly earnings per worker in the sector climbed 3.4% year on year to R37,009 in May 2026.
The relatively restrained pace of wage growth reflects a combination of cost pressures, existing multi-year wage agreements and efforts by companies to control expenses during a difficult operating period.
Productivity remains the bigger concern
Behind the employment figures lies another persistent problem: South Africa is producing less output per worker than before the pandemic.
The labour productivity index fell to 88 in May 2026, using the first quarter of 2019 as the 100-point benchmark. That leaves productivity about 12% below its pre-pandemic level.
The decline has broadly persisted since 2021, with infrastructure constraints, unreliable energy, logistics problems and weak economic growth continuing to weigh on efficiency.
At the same time, real earnings have moved in the opposite direction.
The real earnings index stood at 158 in May 2026, meaning inflation-adjusted earnings per worker were about 58% above the 2019 benchmark.
Part of that increase may reflect changes in the composition of the workforce and higher pay among workers who remained employed. But the growing gap between earnings and productivity presents a difficult equation for employers.
Long-term wage growth is closely tied to the ability of businesses and workers to generate more output. Without stronger investment, better infrastructure, more efficient logistics and improvements in skills, companies could find it increasingly difficult to absorb higher labour and fuel costs while continuing to expand employment.
For South Africa’s job market, that makes the next moves in fuel prices more than a matter of what motorists pay at the pump. They could also influence hiring, wages, business costs and the pace of economic recovery.
