The average salary increase in South Africa for this year

In order to recruit and keep employees in the face of rising inflation and a competitive labour market, South African firms are considering boosting compensation by an average of 6.1% in 2023.

Employers are boosting their pay budgets as high levels of inflation have struck workers hard, while the labour market has grown more competitive and tough, according to new data by global broking and solutions provider WTW.

Companies are also attempting to enhance employee retention, according to the association.

According to WTW’s most recent Salary Budget Planning Report, which questioned 423 respondents throughout the country, the 6.1% rise for this year is somewhat higher than the 5.9% average increase in the pay budget offered 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.”

According to WTW, many businesses are optimistic about the future and want to employ.

According to the association, over a third of firms (31%) said their business’s prognosis is better than they expected, while 49% said it was in line with their expectations.

According to the most recent average salary statistics from Statistics South Africa (StatsSA), the average monthly wage is currently R24,813 or R297,756 yearly. If one earns the average wage and receives a 6.1% raise, they will have an extra R18,000 in their wallets at the end of the year – or R1,500 more per month.

While WTW discusses compensation hikes for current employees and a tiny fraction of organisations seeking new talent, KPMG’s most recent CEO Outlook for South Africa reveals that over 80% of CEOs in South Africa have imposed or plan to implement a hiring freeze in the next months.

Between July and August, KPMG questioned 50 leading CEOs from diverse industries to learn about their thoughts on the country and its future, and compared the results to those of 1,300 worldwide executives. According to the poll, firms and leaders are rethinking their strategy in light of the looming recession, with an emphasis on talent retention.

Despite the recovery of several economic sectors, the country’s unemployment rate remains below pre-pandemic levels, according to researchers from the Bureau of Economic Research. The unemployment rate rose by one percentage point lately, from 32.9% to 33.9%, depicting a gloomy image.