Expecting a Major Salary Boost? Key Insights for South African Employees

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JEREMY MAGGS: As we reach mid-year with temperatures dipping, it’s that time for salary reviews. Considering the ongoing economic uncertainty and increasing living costs, how realistic are our expectations for raises this year?

I’m here with Lindiwe Sebesho, a master reward specialist and executive member of the South African Reward Association. Let’s separate the facts from overly optimistic expectations.

Welcome, Lindiwe. To begin, do you believe most employees will feel let down by their salary increases this year?

LINDIWE SEBESHO: Thanks for having me, Jeremy. Yes, expectations are notably high, and plans are laid out. We at the Reward Association monitor employers’ forecasts while considering various factors.

Employers will indeed be offering raises, but there’s a clear caution regarding the amounts.

JEREMY MAGGS: What average percentage increases are being offered across different sectors, both public and private?

LINDIWE SEBESHO: On average, we’re observing increases around 5% to 6%, which is promising, translating to an estimated real increase of about 3%, aligning with the Consumer Price Index. The downward trend appears more favorable.

Some sectors that demand higher skills, like financial services and technology, are offering increases above this average.

For example, there are significant increases being noted in financial services, tech companies, and healthcare sectors based on their innovative development.

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JEREMY MAGGS: Many believe their cost of living increases have surpassed inflation. Do employers take that into account?

LINDIWE SEBESHO: Definitely, Jeremy. The real cost of living has escalated beyond the inflation trends, impacting everyday expenditures like fuel and food.

Thus, employees receiving an average raise of about 5% to 6% may still feel the strain of higher living costs.

JEREMY MAGGS: What key factors influence a company’s capacity to provide salary increases now?

LINDIWE SEBESHO: The main factor is affordability, which ties back to the company’s performance. Can it deliver the necessary services or products to justify salary increases? Additionally, the demand for skilled talent plays a critical role. Many firms seek highly skilled employees to maintain strategic execution.

Sadly, economic conditions have made it a struggle for both employees and employers, ultimately centering on affordability. It also depends on how effective the talent strategies are and what employers can truly accommodate at this time.

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JEREMY MAGGS: In your view, what’s the most significant blunder employees make when they ask for a raise in this tough economic landscape?

LINDIWE SEBESHO: A frequent misstep is not understanding the factors that influence salary increases. Employees need to do their research regarding their organization’s status.

Oftentimes, employees fail to review their organization’s integrated reports, which contain vital information.

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It’s essential to engage with your line manager to grasp the business’s overall performance. Understand your organization’s remuneration policy and know the worth of your job.

While various sources provide salary data, leverage authoritative figures from recognized experts to accurately assess your job’s value and how it fits within your organization’s compensation framework.

JEREMY MAGGS: Those are valid points, but companies and HR leaders also need to communicate salary decisions and strategies more effectively, ideally with greater transparency and constructiveness.

LINDIWE SEBESHO: Indeed, Jeremy. This is something we promote at the South African Reward Association—employers should communicate more transparently, and employees should actively engage with that information. Performance is a crucial element for both sides.

The employer-employee relationship fundamentally revolves around productivity and performance.

Numerous organizations have performance management processes in place, yet not all employees or employers use them effectively to clarify the contributions necessary for organizational growth, which would justify salary increases and other pay components like benefits and performance incentives.

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JEREMY MAGGS: There’s ongoing debate about the efficacy of the pay-for-performance model, especially when companies face challenges and employees are stretched thin.

LINDIWE SEBESHO: Absolutely. The pay-for-performance model assumes that individual performance links directly to a company’s success, disregarding external factors that might influence overall performance. Hence, a comprehensive understanding is crucial for effective implementation.

JEREMY MAGGS: It’s not only about the salary, right? More emphasis should be placed on the complete rewards package beyond just financial compensation.

LINDIWE SEBESHO: Exactly, Jeremy. We advocate for a broader outlook on remuneration. It encompasses much more than salary; it includes benefits such as retirement plans, wellness initiatives, flexible working arrangements, and generous leave policies.

These elements contribute indirect costs but are essential for optimizing the overall compensation package.

JEREMY MAGGS: As a final question, what’s your top advice for someone gearing up for a salary discussion this month?

LINDIWE SEBESHO: Be well-informed. Understand your organization’s performance and its financial capacity. Familiarize yourself with the remuneration policy, ascertain your job’s value, and be ready to articulate your contributions.

Moreover, approach the discussion with openness. It’s not solely about pursuing a raise—considering long-term job security is equally crucial.

JEREMY MAGGS: Indeed, preparation is key before that important conversation. Thank you, Lindiwe Sebesho, master reward specialist and committee member at the South African Reward Association. Your insights are invaluable.

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