South African employers are aiming for 6.1% salary increases in 2023 to compete for staff in a challenging job market and high inflation. This increase is slightly higher than the 5.9% increase in pay budgets in 2022 but bodes well for people who are looking for work in various areas.
Local employers plan to increase their salary budgets to attract and retain staff, according to research by WTW, a global advisory, broking and solutions company.
Its latest Salary Budget Planning Report, which received 423 responses in South Africa, found that nearly four in ten (38%) businesses said their pay budget for 2023 is higher than they thought it would be.
The Salary Budget Planning Report is a global study about salary budgets and recruitment compiled by WTW’s Reward Data Intelligence practice. The survey was conducted in November 2022 and about 32 908 sets of responses were received from companies across 159 countries worldwide.
Melanie Trollip, director of work and rewards at WTW South Africa, says employers are increasing pay budgets for three key reasons, namely their concern for inflation (78%), their response to a challenging labour market (37%) and improving retention of existing staff (30%).
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Salary increases just below inflation
However, the forecast pay increases for this year are slightly below inflation, which is common in more challenging economic times.
“Employers face tough choices as they try to control costs during a testing business climate, but also strive to keep their pay levels attractive. Organisations that succeed will have a clear reward strategy and an understanding of what employees are looking for.”
While South Africa is caught in a challenging economy with high interest rates and protracted load shedding that affects all businesses, Trollip says many local companies are upbeat about the business outlook and are in hiring mode.
Almost a third (31%) said that the outlook for their business is better than they forecast it would be, while 49% said it was in line with their expectations. A quarter (25%) plan to increase their total headcount over the next 12 months, while half (51%) plan to recruit employees for engineering roles in the next 12 months, 44% will hire staff for IT roles and 44% want to employ more workers in sales.
What does this mean for South Africans? “There are signs of optimism around business sentiment and hiring plans, particularly for certain roles in engineering, sales and IT. While pay is important, there are many other factors involved in workplace engagement and success and employers must deliver an attractive overall employee experience.”
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