Employers in South Africa are planning to increase their budgets for pay by 6.1% in 2024 as they try to attract and retain staff amidst ongoing inflation and a competitive labour market, according to research by WTW, a global advisory, broking and solutions company.
Organisations are planning this increase for two main reasons. Inflationary pressure was a factor cited by seven in ten firms (70%), while almost half (44%) said they are responding to a more challenging labour market and trying to attract and retain employees.
WTW’s latest Salary Budget Planning Report, which got 440 responses in South Africa, also found that the 6.1% raise planned for 2024 is slightly lower than the 6.6% actual average rise in pay budgets made in 2023.
“Businesses are still grappling with inflationary pressures and a tight labour market, and these factors are pushing up salaries. The forecast rises for next year are slightly lower than what we have seen this year, but overall they are still at a relatively high rate. Inflation seems to be cooling and that may leave people with an improvement in what they earn in real terms,” says Melanie Trollip, Director of Work and Rewards, WTW South Africa.
“Employers are trying to adapt to an evolving environment in which yesterday’s certainties no longer apply. Those companies that have a clear strategy on how they reward their workforce will be more successful at attracting and retaining the best people.”
Business Optimism and Hiring
South African firms are fairly upbeat about the economy. A third (34%) said that the outlook for their business is better than they had forecast, while 57% said it was in line with their expectations. Reflecting this optimism, 16% plan to increase their total headcount over the next 12 months. Six in ten (59%) employers plan to recruit engineers in the next 12 months, while 56% are hiring in IT roles, and 48% want more salespeople.
Trollip added: “Technical skills like engineering and IT remain hotspots in the labour market, while interest in sales staff often reflects an ambition to expand. It takes more than higher pay to attract and keep great talent, and the past few years have pressed companies to be more resourceful. As workforces become more diverse, demanding and dynamic, the key is understanding their specific needs and preferences, and matching that to an overall reward programme.”
