SA pay hikes above global average
South African employees can expect higher pay rises than workers worldwide in the next year, but tough economic conditions and lack of skilled labour may put a damper on the country’s long-term prospects.
According to Grant Thornton‘s International Business Report survey, 68% of SA companies plan to increase salaries in line with inflation over the next 12 months.
A quarter (26%) of companies said they would increase salaries above inflation – while 5% of SA companies said they would not increase salaries at all.
“It is important to remember, though, that SA’s inflation is higher than in other countries and one must take this into account when assessing real increases,” Grant Thornton said.
Global comparison
South Africa’s figures contrast the lower wage increase expectations of the BRIC nations (Brazil, Russia, India and China) where 18% of businesses said they would not increase wages over the next year.
21% of global companies said the same.
Only 15% and 14% of BRIC and global companies, respectively, said that they would increase wages above inflation.
“SA’s labour unions and collective bargaining councils ensure that employees get salary increases every year, which sets the tone for the private sector,” said Ian Scott, managing partner for Grant Thornton.
“But, continuing to increase salaries every year in a struggling economy places SA firmly in the danger zone for rising inflation over the next 12 months – and this could have a negative impact on this county’s growth expectations for the year ahead,” he said.
Lack of skills
A big problem South Africa faces, according to Scott, is a lack of skilled and technical labour.
According to the survey, 83% of local businesses reported a lack of technical skills when it came to recruitment. Only 61% of BRIC economies and 64% of global businesses reported this challenge.
58% of SA businesses report difficulties in recruiting skilled workers.
Scott said that it’s imperative for business and government to work more closely to find solutions to SA’s employment crisis.
“SA also needs to urgently increase productivity, which is far behind many other countries globally, if we are to see business growth and economic success,” he said.
On a positive side, the survey revealed that 43% of South African companies are hiring more people when compared to previous years – and staff were being retained.
The data for this report was drawn from interviews with 3,450 global CEOs, managing directors, chairmen or other senior executives from all industry sectors conducted in November and December 2012.
Loading ...