Salary increases still the norm in South Africa

The era of big fat bonuses and golden hellos is (at least temporarily) over, in South Africa as well as pretty much everywhere else. But on the salary front the situation is less gloomy.

Pay increases are still the norm, according to a new snap survey by Mabili Reward, a management advisory firm, even if companies across the board are busy reviewing their remuneration packages. Financial sector companies usually grant increases in April, but this year some have delayed any decision until there is more clarity on how fast the economy is deteriorating.

The financial sector, with a predicted average increase of 8.4% this year is slightly above the overall average of 8.3%, well above the construction and engineering sector (+7.8%) but below the manufacturing sector (+8.8%).

Top executives seem to be getting the worst deal, with predicted increases of only 7.2%, while general staff are likely to get 9.2%. The CPI inflation rate is currently 8.1 per cent in South Africa.

"We have noted that many organisations are looking to trim increases and focus on variable pay," says Laurence Grubb, managing director of Mabili Reward. "The focus in on developing variable pay structures intended to protect organisations on the downside, while still providing suitable incentives on the upside."

Whatever the general trend, key talent must be retained, no expenses spared. "Despite the current economic climate, businesses are taking note of the hot skills that are critical to competitiveness," the survey states, granting "exceptional increases in order to drive retention and address skill shortages."

Junior traders, for example, are likely to receive increases of 20%, while chartered accountants will be offered an inflation-busting 15 per cent. Financial institutions including Absa, First National Bank, Old Mutual, Liberty, Sanlam, Swiss Re Africa, Nedbank and Investec have taken part in the survey.

The picture is also confirmed by another new survey by accounting firm Grant Thornton, which reveals that 91% of private sector businesses in South Africa are planning to increase salaries in line with inflation or above, a percentage significantly higher than the global average of 64%. Only 7% of South African businesses expect to reduce pay or to offer no salary increases.

There will be no significant growth in employment in South Africa in 2009, the survey predicts, but those with a job seem better off than workers in many other countries.