Bad news for salaries and benefits in South Africa
South African employers are expected to only give a 4% to 6% salary increase in the next 12-month period – substantially lower than the current inflation rate.
According to René Richter, Managing Director of Remchannel, findings from its bi-annual Salary and Wage Movement Survey Report showed that employees are taking the financial strain.
She said that if salary increases come in lower than inflation, it will dent employees’ already small disposable income and place companies in a tricky position where they will have to find new ways to keep staff engaged and retain critical skills.
The group’s report is based on the data submitted by 65 organisations from a broad cross-section of companies spanning a wide range of economic sectors
An analysis of the employee categories under review includes Executive, Management, General Staff and Unionised Staff, totalling roughly 340,000.
Richter said that sustained load shedding has added to the continued downward trajectory of the country’s economic growth.
“Invariably, South African households are under pressure with the vast majority of ‘blue collar’ employees becoming poorer. If households want to climb out of this rut and gain more wealth, their income must increase at least by more than the consumer price inflation (CPI) rate,” she noted.
In light of the economic decline, businesses have tightened their belts to curb costs – further hampering the prospect of employees getting an above-inflation increase.
Great resignation is here to stay
Richter said that despite decreasing in popularity post-pandemic – the ‘great resignation’ is not going anywhere.
The group’s report showed that organisations lose experience and accumulated knowledge when employees leave, with the average labour turnover averaging 16.6%.
She noted that in South Africa, the ‘great resignation’ is ring-fenced in the professional and specialist roles of scarce skills in the market.
Richter said that not enough companies record the reasons employees move on.
According to the report, the following sectors saw the most considerable staff turnover:
- Financial services
- Information and communications
- Retail and consumer manufacturing
- Mining and manufacturing
- Sales and marketing
- Human Resources
Richter said a decline in the number of highly skilled workers would force employers to reconsider their employee value proposition and retention policies. The report further found that:
- 44% of employees resigned due to better career prospects, higher remuneration and improved employment conditions
- 20% of employees experience burnout, stress, changing careers or emigrating
- 9% experience a toxic workplace
Traditionally, the number one reason for the resignation has been better pay followed by better career opportunities and development; however, new value propositions are emerging.
Richter said that another factor employers need to consider is that the pandemic transformed the world of work.
“Some 66% of employees want increased mobility and 63% more flexibility. Most employees also believe their productivity has increased in the work-from-home environment and enjoy a better work-life balance.”
“Employees and jobseekers are prioritising how they want to structure their professional lives – frequently around their personal lives. When looking for jobs, they value personal success over professional wins.”
For smaller organizations, providing flexible work arrangements can be a major change that requires significant resources, including technology, management, and competitiveness. According to Richter, employers must collaborate with their employees to determine the best work model, such as remote, hybrid, or office-based.
She also suggested that offering flexibility can improve employees’ overall health and well-being. This can be achieved through a flexible schedule, professional opportunities, and benefits that promote work-life balance.
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