It’s doubtful that South African employees will get a raise this year that matches the cost of living.
Dr. Mark Bussin, an EXCO member and Master Reward Specialist at the South African Reward Association (SARA), asserts that due to the nation’s economic volatility, obtaining a rise that is commensurate with inflation is extremely improbable absent prompt government intervention.
According to Bussin, “Unfortunately, the current status of South Africa means that businesses’ financial outlooks are typically gloomy, and this will directly affect their capacity to provide any type of substantial raises to staff.”
He continued by saying that some features of the present economic situation will influence judgments on pay raises. These consist of:
- Pedestrian economic growth;
- Despairing energy supply;
- Zero investment confidence;
- High inflation;
- Dismal service delivery at all levels of government – local, provincial and national; and
- No political will from the government.
Bussin continued by saying that the economic downturn will make businesses more cautious and push them to put corporate budget stability first, which will limit employee compensation.
The likelihood of a decline in business income also suggests that compensation increases may be postponed or scaled back.
When deciding whether to raise salaries, companies will also consider the present unemployment rate and the labor market’s competition.
Businesses may change the size and frequency of rewards depending on the company’s financial success, which might make employees work harder for bonuses and incentives. To cut expenses, some companies can decide to completely do away with incentives or bonuses.
Employers in South Africa said they planned to increase their pay budgets for the year, according to research by international broking and solutions company WTW at the beginning of the year, as high levels of inflation have hit workers hard and the labor market has grown more competitive and challenging.