Good news for salary increases in South Africa
South Africans can expect an average salary increase of 6% in 2024/25, which will ensure that earnings beat inflation.
This is according to Dr Mark Bussin, Master Reward Specialist and Executive Committee Member of the South African Reward Association (SARA).
“There is a glimmer of hope regarding GDP growth, and if we continue on this trajectory, it could mean the brighter future we’ve all been praying for,” said Bussin.
Although salary increases are not the only consideration in a robust total rewards programme, they are a cornerstone.
Salary increases are a vital factor in business sustainability.
They are also essential to employees who, due to inflation, become relatively poorer yearly if their salary stays the same.
A timely salary increase helps them stay ahead of the cost of living and pursue a content lifestyle.
The latest figures from Stats SA showed that inflation stood at 4.4% in August.
The Bureau for Economic Research’s (BER’s) latest inflation expectation survey showed that analysts, business people, and trade unions expect average inflation to be 5.1% in 2024 before subsidising to 4.8% in 2025 and 2026.
At the current rate of 4.4%, South Africans will receive a 1.6% real salary increase.
This means that real salary increases should be made over the coming year.
Bussin said that the start point for setting salary increases is typically the consumer price index (CPI), but there are other factors that employers need to consider. This includes:
- The projected financial performance of the organisation
- The affordability of the increases
- The sustainability of the business
- The extent of salary increases in the previous year
- The performance of individual employees
- Union expectations and demands
- Current employee remuneration compared to market benchmarks
- How important the attraction and retention of key roles and critical skills are to the organisation
Comprehending these and other factors unique to a business helps employers to take the guesswork out of salary increases.
SARA’s data shows that increases for 2024 by staff category will look like the following:
- Unionised Staff – median of 6.25%
- General Staff – median of 6.01%
- Specialists – median of 6.00%
- Management – median of 5.97%
- Executives – median of 5.79%
- CEO – median of 5.70%
Other aspects to keep in mind
The Reserve Bank’s recent reduction in the repo rate from 8.25% to 8% also improves the cost-of-living gap somewhat as workers will pay less to service their debt.
Nevertheless, Bussin said that the drop in interest rates is a silver lining as many employees are over-indebted while others continue to live in what SARA calls “in-work poverty.”
“We need to aim for a living wage that allows workers to live with dignity,” said Bussin.
Although salary increases are important, Bussin said that remuneration and increases do not live in a silo.
“The country needs growth, and growth needs skills and talent.”
“We have both, but we must unleash them by creating the correct government policy framework and certainty to support it.”
SARA said that lawmakers need to push much-needed policy reforms to boost organisations’ ability to grow and hire unemployed people.
Research from the BER showed that if reforms are implemented quickly, South Africa could achieve GDP growth of 3% by next year – a significant improvement from the 0.7% in 2023 and the expected 1.0% for 2024.
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