A market with unfulfilled potential: Who is SA’s working class?

The University of Cape Town’s (UCT) Liberty Institute’s The Majority Report 2025 has made key findings about South Africa’s working class (households earning between R8 000 and R22 000 per month), revealing that it has expanded significantly – from 9 million to 15 million (67%) – despite the country’s ongoing economic struggles.

Two events were hosted on 14 February to share the report’s findings – one in Johannesburg and one in Cape Town. The institute used government’s income thresholds to define the working class. Their line for where the working-class stops is a R22 000 household income; households can still qualify for a ‘gap market’ housing subsidy. The R8 000 cut-off is where households no longer qualify for government grants and therefore depend on wage income.

In 2014, the institute conducted its first Majority Report study. A decade later, the 2024 edition captured significant changes.

Titled An investigation into SA’s Mass Market, the report notes, “This vital segment, consisting of households earning less than R22 000 per month, wields an annual spending power of over R1 trillion, marking it as a formidable market force.” Between 2012 and 2022, South Africa’s working class grew by an eye-opening six million people, while the number of working-class households increased by 1.3 million over the same period.

An analysis of the General Household Survey (GHS) data by the institute also found that the spending power of the working class nearly doubled, surging from R280 billion a year to R550 billion in 2022. This group now accounts for nearly a quarter of all consumer spending.

Middle-class status trajectory

Associate Professor James Lappeman, the head of projects at the UCT Liberty Institute, remarked: “Growth in the working class is being driven by several factors, including wage inflation and population growth. However, despite their increasing size and spending power, this segment is often ignored by businesses whose focus is concentrated on the middle and upper classes.”

“Many of today’s working-class South Africans will be tomorrow’s middle class.”

What’s more, as contained in the dossier, the country’s mass market is growing. According to GHS survey data, there are 3 million more people since 2012. There is an eye-watering R490 billion growth in spending power since 2012 and 800 new households have formed every day. Additionally, 85% of all South African children live in ‘mass market’ households.

Associated Professor Lappeman continued: “They [working class] make up nearly a quarter of the population, and because of their sheer numbers, they are the dominant buying group in a number of categories. Yet, they are still not given the attention they deserve.”

Paul Egan, the head of the UCT Liberty Institute, highlighted the long-term significance of the working class, noting that many within this group are on a trajectory towards middle-class status.

“Many of today’s working-class South Africans will be tomorrow’s middle class. While financial pressures are real, this group is highly aspirational, optimistic, and resourceful,” said Egan.

The question then becomes: How does the majority cope? The Sustainable Livelihoods Foundation data notes that, “One in every six South Africans work in the informal sector; almost 80% of the 1.4 million informal enterprises are one-person firms; there are more people employed in the informal sector than the mining sector; the large proportion of enterprises are located at owners’ homes and are largely integrated into the household.”

Unfulfilled potential

Vulnerable South Africans have complicated financial lives. Cash flows are small and often irregular; earnings come from diverse sources; low earnings force households to commit time and effort towards financial planning. The solution for people is to spend clever, use less electricity and bundle travel, the findings revealed.

Egan noted: “We see individuals and households investing in education, skill development, and entrepreneurial ventures to climb the economic ladder. Even though they are less resourced, there is a clear demand for brands that deliver both value and aspiration, making this a key market for businesses looking to build long-term consumer loyalty.”

“This is a market with unfulfilled potential.”

In sum, the institute concluded that the working class can be seen as “resource maximisers with the ability to leverage networks, deals, specials, tailoring usage patterns and group buying. However, for most, prospects are unclear but aspirations remain high. This is a market with unfulfilled potential.”