The South African Reward Association (SARA) has forecast that salaries will increase, on average, by an estimated 6% in 2024/25.
“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 Dr Mark Bussin, master reward specialist and executive committee member of SARA.
SARA’s data indicates that increases, by staff category, will be as follows:
- 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%
- Chief executives – median of 5.70%
The increase percentage above inflation is the employee’s real salary increase. According to Statistics South Africa, inflation was 3.8% in September, so an increase of, say, 6% results in a real salary increase of 2.2%.
The Bureau for Economic Research’s latest inflation expectation survey showed that analysts, business-people, and trade unions expect average inflation to be 5.1% in 2024 and decline to 4.8% in 2025 and 2026.
The South African Reserve Bank’s recent reduction in interest rates from 8.25% to 8% improves the cost-of-living gap somewhat because workers will pay less to service their debt.
However, according to Bussin, it is a thin silver lining because many employees remain over-indebted, while others continue to live in what he calls “in-work poverty”. “We need to aim for a living wage that allows workers to live with dignity,” he said.
Typically, the start point for setting salary increases is the consumer price index (CPI). However, Bussin said employers need to consider additional factors, such as:
- 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; and
- how important it is for the organisation to attract and retain key roles and critical skills.
Understanding these and other factors unique to their business helps employers to take the guesswork out of salary increases.
Bussin said that remuneration and increases do not exist in a silo.
“The country needs growth, and growth needs skills and talent,” he said. “We have both, but we must unleash them by creating the correct government policy framework and certainty to support it.”
Therefore, lawmakers need urgently to implement much-needed policy reforms that will boost organisations’ ability to grow and hire unemployed people.
