Growth in employee compensation appears to be slowing in South Africa

New analysis from global professional services firm PwC has indicated that nothing extravagant can be expected in terms of salary increases across the South African market over the next year. The average increase across the country, according to the firm, will be approximately 6%. 

Economic growth has been sluggish in South Africa recently, which has affected the compensation & benefits packages of employees in the country among a range of other repercussions. Nevertheless, while the economy appears to be recovering slowly, pay hikes appear to be slowing.

In October last year, PwC reported an increase of 6.3% in compensation packages across South Africa for 12 months rolling, a figure that has now dropped to 6%. The scenario is brought about through the intersection of a number of contributing factors unfolding in a turbulent economy.

Businesses are struggling in the current economic climate, and recent analysis has revealed that employees account for the largest portion of overall operational costs, leaving little room for growth in compensation packages. Given the expanding skill profile required of employees in a digital environment, these costs have further been on the rise.

Meanwhile, firms have little incentive to increase pay, given the high demand for jobs across the country. South Africa records one of the highest unemployment rates in the world, and few professionals can afford to consider increase rates when selecting professional opportunities.

“it is also evident that only 34% of the responses indicated that the participants ‘regularly measure’ some or all of the employee costs listed and associated with the loss of key skills. Although direct costs such as replacement costs in the form of agency fees are easier to track, the hidden real cost of staff turnover remains something of a ‘black box,’” said the firm in its analysis.

“Accurate tracking of these costs may influence the retention strategies of many organisations, and it remains concerning that organisations are not more dedicated to measuring these costs on a regular basis,” it added.