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IOL News
18 hours ago
- Business
- IOL News
Salary increase season - what's realistic and what's not in 2025
Employers' ability to increase salaries is influenced by several factors, including national and global economic growth prospects, company performance and affordability, as well as skills market trends. Image: Independent Newspapers Archives For many South Africans that are formally employed in both the government and private sectors, mid-year marks a pivotal time for mid-year salary reviews and potential raises. It is a time brimming with anticipation and hope, as employees look forward to some financial relief for their hard work and dedication. However, the economic landscape is a complex and ever-shifting terrain. 'Whilst the inflation outlook has improved over the last few months with CPI averaging 3.0% as at April 2025, there's a lot happening both locally and globally that impacts employers' ability to meet everyone's salary increase expectations,' Lindiwe Sebesho, Master Reward Specialist and Executive Committee Member at the South African Reward Association (SARA) said. She advised that employees manage their expectations by understanding the economic factors at play. This understanding can lead to more constructive and better-informed salary conversations, ultimately fostering a healthier employer-employee relations environment focused on driving much needed productivity for the country. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. 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Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Next Stay Close ✕ Know the factors at play Employers' ability to increase salaries is influenced by several factors, including national and global economic growth prospects, company performance and affordability, as well as skills market trends. Inflation is expected to remain moderate and within the South African Reserve Bank's 3-6% target range through 2025/26. However, even with recent cuts, interest rates remain high, making debt expensive for individuals and organisations alike, and leaving both employees and employers under financial strain. While we dodged the VAT bullet, the increase to the fuel levy will still hit everyone hard, from individual motorists to company and public service fleets. This cost might be offset by expectations of lower fuel prices but will still have an adverse impact on expenses. Additionally, rising food costs due to droughts and other climatic factors will put further pressure on budgets. Employers will also be hampered by weaker GDP growth than previously predicted, as well as global economic instability fuelled by US President Trump's on-again-off-again tariffs. Tariffs on South Africa's trading partners could create unwelcome local inflation, making organisations wary of committing to higher labour costs. "Considering the present economic circumstances, a balanced approach to salary adjustments is required. The intention is not to undervalue employees but to explore comprehensive strategies for improving the overall employee value proposition in a manner that ensures business sustainability and job security," Sebesho added. Given these facts, you may need more information to optimise your remuneration package beyond just a salary increase. Take a positive approach Despite economic pressures, you can improve your odds by taking some simple steps, such as: Know your job's worth - There are many sources of salary information so you can decide if you are being paid fairly, but make sure you use authoritative information from recognised experts, along with considering remuneration policy information from your employer. - There are many sources of information so you can decide if you are being paid fairly, but make sure you use authoritative information from recognised experts, along with considering remuneration policy information from your employer. Be understanding - If you do your homework and understand your employer's constraints, you can approach your salary increase conversation more rationally and constructively, which could help you win a more positive outcome that also helps you retain your job in the long term. - If you do your homework and understand your employer's constraints, you can approach your conversation more rationally and constructively, which could help you win a more positive outcome that also helps you retain your job in the long term. Show your value - Salary increases are typically based on performance, so now is the time to demonstrate how well you have done personally and your contribution to the organisation's goals – this might help you get a bit more than you expected. - increases are typically based on performance, so now is the time to demonstrate how well you have done personally and your contribution to the organisation's goals – this might help you get a bit more than you expected. See the big picture - Remuneration isn't just about money but includes benefits and other rewards as well, so review your entire remuneration package and ask about non-monetary or money-saving benefits, including how you can flex your retirement benefits to help offset any immediate financial shortfall without compromising your long-term savings goals. Keep it real and respectful While you may be desperate for, expecting or even demanding an above-inflation increase, it is important to be realistic and, especially, respectful during a salary increase conversation. Employers are also strapped due to economic conditions and understanding their limitations without over-comprising yourself will be appreciated. Sebesho said, "It is essential to expect fair and equitable pay that allows you to participate effectively in the economy. However, understanding both perspectives is crucial for balanced salary adjustment negotiations that ultimately safeguard employment."
Daily Maverick
14-05-2025
- Business
- Daily Maverick
Same desk, shrinking pay cheque – SA's declining job turnover isn't a sign of stability
When employees stay put, it's often seen as an indication of loyalty or satisfaction. In South Africa's labour market, where the turnover rate has shrunk to 13.5%, the decision-making behind the data may be more desperate than devoted. According to Remchannel's April 2025 Salary and Wage Movement Survey, the overall turnover rate is at its lowest since 2021. At face value, this might sound like good news for employers struggling to retain scarce skills in a constrained economy. 'We have noted a decline in the overall labour turnover,' Lindiwe Sebesho, MD of Remchannel, said. 'There could be various reasons for that. We are seeing that the market is not producing a lot of new job opportunities.' Catch up Old Mutual Corporate Remchannels' salary and wage survey This survey tracks pay and turnover trends across South Africa's formal job sector. Remchannel, a remuneration research consultancy under Old Mutual Corporate, surveys companies twice a year to help them plan salary increases and retention strategies. The latest survey, released on 13 May, captured insights from 51 companies representing 322,000 employees. Resignation leads the exit wave Despite the fall in overall churn, the survey indicates that resignation remains the biggest cause of termination costs, nudging up from 37% to 39% over the past year. That 39% refers to the proportion of terminations where the employee voluntarily quit. Sebesho said that the reason for those resignations was probably due to the high level of financial pressures in the market that employees faced. Resignation remains the leading cause of staff turnover in 2025, accounting for 39% of exits, according to Remchannel data. (Graph: Remchannel). A South African Depression and Anxiety Group survey last November showed that 61% of employees wished they could afford to quit their job. The pool of opportunities has shrunk, particularly for mid-level to entry-level workers. Sebesho said organisations needed to stop assuming salary hikes alone would stem the talent leak. 'Our recommendation for employers is really to move on with the times from a flexibility and choice perspective,' she said. 'We recommend providing a comprehensive, fair, competitive pay package to employees… within that, they [should be] enabled to tailor their [payment structure], especially the benefits aspect, to talk to their needs.' Pay increases do not beat the cost of living In theory, salary increases are staying ahead of inflation, averaging 5.8%. The gap between the two is narrowing faster. Last year, the salary increases granted in Remchannel's survey averaged 6.09%. Now, companies are reining in their payroll spend as they face their own cost crunches. 'There is a narrowing of that gap between inflation and the actual [salary] increases granted. That talks to refinement strategies by a lot of organisations who too are under a bit of cost pressure,' Sebesho said. 'The real cost of living has been much higher than the actual CPI that we see.' To address the growing financial pressures, it's essential for businesses to adopt innovative and integrated employee benefits that help ease the financial strain, explains Blessing Utete, managing executive of Old Mutual Corporate Consultants. 'Companies that take a holistic approach – addressing not just pay, but the overall financial wellbeing of their employees – will not only help employees feel valued, but also strengthen their ability to retain talent in a competitive job market by enhancing the perceived value of their company's employee proposition.' 'This could mean offering flexible working arrangements, which save employees money on commuting, or implementing solutions such as earned wage access, wellness programmes and other financial counselling to help employees better manage their finances,' he says. The pay pinch persists. Average salary increases for 2025 continue to lag behind South Africa's consumer price index, leaving employees with less spending power, Remchannel data shows. (Graph: Remchannel) Sebesho stressed that while salary increases had outpaced inflation, productivity-linked differentiation remained lacking, with only 19.6% of employers conducting regular performance reviews. Catch up How does this affect you? Job security is up, but opportunities are down. The job market is tight, with fewer new roles opening up. Unemployment remains high. Even if you have a job, moving up or sideways is harder than ever. The cost of living still bites. Despite inflation easing, essentials are outpacing salary increases, leaving many workers worse off in real terms. Flexibility is under threat. If your employer is pulling back remote working options, you may have less say than a year ago. The canary in the workplace coalmine Perhaps the most telling sign of discontent is a lack of flexibility. Post-pandemic lessons are fading fast as many organisations roll back remote work privileges. 'It's understandable that a lot of organisations believe that to create collaboration, people need to interact in person,' Sebesho said. 'But the flexibility should ideally not be taken away completely, especially for people who are performing.' Salary increases are stretched even thinner for employees who need to bear the brunt of increased commuting and other work-related expenses. Sebesho also urged employers to consider not just financial remuneration, but also how benefits were structured and communicated, especially for younger workers who often neglected long-term planning. Skills mismatch, stalled mobility South Africa's job market remains unforgiving. Unemployment is stubbornly hovering above 32% and youth unemployment even higher at 46.1%, according to the Quarterly Labour Force Survey Q1 2025. 'It's very important that there is a way of addressing the [skills mismatch],' Sebesho said. 'It's a very important aspect of making sure that you are training your people, ensuring you address those skills mismatches, also contributing towards the long-term sustainability of our economy.' DM
The Citizen
13-05-2025
- Business
- The Citizen
Salary survey shows gap between increases and inflation narrowing
As the cost of living increases, salary increases stop mattering so much for employees, and they need other perks to keep them loyal. A salary survey shows a concerning trend of the gap between salary increases and inflation narrowing, making it even more difficult for consumers to make ends meet in difficult economic times. Remchannel's April 2025 Salary and Wage Survey indicates that employees in South Africa continue to face cost-of-living pressures, although inflation has decreased to around 3%, and companies have granted salary increases above the rate of inflation. Lindiwe Sebesho, managing director of Remchannel, points out that although salary increases continue to exceed inflation at an average of 5.82%, the gap between the two is narrowing, as salary increases averaged 6.09% in the previous year. 'This trend suggests a more cautious approach by employers, who must also prioritise cost control amidst a constrained economic environment.' ALSO READ: What most women look for in a job – report Resignations down, but disengagement becomes a challenge Investigating resignation trends and the hidden risk of disengagement, the survey revealed a reduced overall turnover rate of 13.5%, a decrease from the previous rate of 15.5%. Sebesho says while this reduction suggests much-needed stability, it also reflects a market with fewer new job opportunities due to companies' widespread downsizing. 'This data confirms the financial pressures on employees, as 39% of those who resigned were seeking better pay and career growth, while 31% left due to dissatisfaction with their current roles.' She cautions that the true concern may extend beyond employees resigning, including the challenge of retaining disengaged staff members. 'Even with above-inflation salary increases, many employees still feel financially constrained and undervalued. 'Therefore, the lower turnover may be due to a constrained job market that leaves individuals with limited options. When employees feel stuck and unsupported, it may lead to burnout, presenteeism and a decline in productivity.' ALSO READ: 61% of South Africans ready to quit over work stress and lack of support Is it time for companies to rethink their employee value proposition instead of only salary? The report's findings suggest that employers should re-evaluate their strategies for attracting, engaging and retaining talent, Sebesho says. 'This should go beyond ensuring fair and competitive salaries and involve addressing the total reward elements employees seek when feeling financially strained: comprehensive benefits, skills development, career growth, formal recognition and flexible work arrangements. 'It is therefore clear that pay adjustments alone are no longer adequate. To remain competitive, employers must shift focus towards strengthening the broader employee value proposition by integrating financial and non-financial support into everyday practice and experience.' She emphasises that skills development is a critical component of the employee value proposition. 'In a market experiencing high unemployment, skills development is increasingly becoming a crucial component of a company's employee value proposition. 'Investment in skills, specifically through technical education, not only addresses the skills gap but also enhances the employee value proposition. This investment can be demonstrated as part of Total Reward Statements to help employees understand the financial commitment involved in skills initiatives and to highlight an organisation's dedication to long-term employee growth.' ALSO READ: Employers offering better benefits to help struggling employees The power of flexibility vs salary Sebesho says flexibility also remains essential. 'Flexibility is another critical component of a holistic employee value proposition. However, the survey shows that many companies are reviewing their flexible working arrangements in favour of in-office work, a trend that may increase commuting costs and adversely affect employee satisfaction. 'Employees appreciate flexibility when they can work remotely or independently. It can improve well-being, satisfaction, engagement and productivity. Reducing flexibility without valid reason or consideration may result in disengagement and higher turnover.' She says while salary increases are important, they are no longer the only talent attraction lever. 'Employers must rethink their strategies and embrace a broader employee value proposition that integrates flexibility, skills development, career growth and well-being. 'These are not optional extras, but vital investments in creating a more engaged and resilient workforce that contributes effectively to sustainable business success.'
