The average salary increase you can expect in South Africa this year

 ·15 Jan 2023

South African employers are considering increasing pay by an average of 6.1% in 2023 to try to attract and retain staff amid high inflation and a challenging labour market.

According to new research by global broking and solutions company WTW, employers are increasing their pay budgets as high levels of inflation have hit workers hard, while the labour market has become more competitive and challenging.

Companies are also trying to improve staff retention, the group said.

WTW’s latest Salary Budget Planning Report surveyed 423 responses across the country, finding that the 6.1% increase for this year is slightly higher than the 5.9% average boost in the pay budget given in 2022.

“Nearly four in ten (38%) businesses said their pay budget for 2023 is higher than they thought it would be,” reported WTW.

The director of work and rewards at WTW South Africa, Melanie Trollip, said: “The pressure of inflation and a competitive labour market is forcing many to increase their pay budgets so that they can both retain and attract the best staff.”

“The forecast pay increases for this year are, however, slightly below inflation, which is common in more challenging economic times.”

“Employers are facing tough choices as they try to control costs during a testing business climate, but also strive to keep their pay levels attractive. Those organizations that succeed will have a clear reward strategy and an understanding of what employees are looking for.”

Many companies are upbeat about business and looking to hire, reported WTW.

According to the group, close to a third of businesses (31%) said that the outlook for their business is better than they had forecast, while 49% said it was in line with their expectations.

“A quarter (25%) plan to increase their total headcount over the next 12 months. Half (51%) of employers plan to recruit into engineering roles in the next 12 months, while 44% are hiring in IT roles, and 44% also want more workers in sales,” added WTW.

“There are signs of optimism around the business sentiment and hiring plans, particularly for certain roles like engineering, sales, and IT. While pay is important, many other factors are involved in workplace engagement and success, and employers need to deliver an attractive overall employee experience,” said Trollip

Based on the latest average salary data from Statistics South Africa (StatsSA), the average salary is now R24,813 a month or R297,756 annually. If one were to earn the average salary and see a 6.1% increase, they would have an extra R18,000 in their pockets at the end of the year  – or R1,500 more every month.

While WTW talks of salary increases for current employees and a small percentage of companies looking for new talent, KPMG’s most recent CEO Outlook for South Africa shows that over 80% of CEOs across South Africa have implemented a hiring freeze or plan to in the next few months.

KPMG polled 50 top CEOs from various industries between July and August to learn about their perspectives on the nation and its future and compared the results to those of 1,300 global executives. The survey found that organizations and executives are re-evaluating their strategies in light of an impending recession, focusing on talent retention.

Despite some economic sectors rebounding, the unemployment rate in the country remains below pre-pandemic levels, according to economists from the Bureau of Economic Research. The unemployment rate has recently increased by one percentage point from 32.9% to 33.9%, painting a bleak picture.

Read: Dark clouds gathering over South Africa

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