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Salary adjustments and employee expectations

27 July 2023 Myra Knoesen

As inflation and economic challenges continue to affect the nation's workforce, the question remains, are employers paying salary increases in line with the cost of living and inflation?

Comprehensive insights into the pressing issues of salary adjustments and employee expectations in South Africa were recently shared by René Richter, Managing Director of Remchannel, as she presented the findings of the bi-annual 2023 Salary and Wage Movements survey - a survey conducted by Remchannel, a subsidiary of Old Mutual Corporate. 

Delving into the survey's findings and offering expert analysis on the state of South African salaries and wages, the discussion covered key topics such as the reality of South African salary increases in the face of rising living costs, the driving forces behind salary increases, the "Quiet Quitting" phenomenon, and post-pandemic workforce expectations in South Africa. In addition, Samantha Jagdessi, Head of Advice & Best Practice of Old Mutual Corporate Consultants (OMCC), presented an economic overview to help put all the insightful findings into perspective.  

Findings of the bi-annual 2023 Salary

According to Richter, CPI is no longer the main determinant of salary increases. “Over the past three years, we have seen company performance/profitability impact the ability of organisations to pay CPI related increases.” 

Post the pandemic, Richter said there is also a greater emphasis on employee performance and, as such, 66.2% of the participants indicated that they differentiate between top performers and other levels of performance in the increases granted to employees. This also culminates in variable remuneration being offered by 100% of the participants for top performers. 

“Increases have been below CPI since 2021, and although the gap has closed marginally in 2023, increases are still lagging behind CPI,” added Richter. 

What reality does this paint?

Richter said that South Africans are becoming poorer from a net take-home pay perspective. 

“The rising inflation and in particular food and energy inflation are creating an environment where more South Africans need to turn to credit to sustain their living costs,” stated Richter. 

To add to the debt burden, Richter said the rising interest rates are creating an environment where it is difficult to meet monthly expenditure. 

The driving forces behind salary increases

“CPI is one of the top elements considered by companies (85%) but company profitability (79%), individual performance (69%), also ranked highly by participants in the survey,” said Richter.

“Companies are, however, also considering market trends (69%) and in many cases it is also determined by salary surveys (62%) to remain competitive in the market place. Primary focus of organisations remains to be sustainable in the future and to protect South African jobs,” added Richter.

“Over the past 24 months, costs have increased significantly, in particular driven by the economic climate, the impact of loadshedding and the global economic environment. This impacts growth, the ability to pay CPI increases and job creation. Rolling blackouts of about 6 to 12 hours a day, or so-called stage 3 and stage 6 outages, detract between R204 million and R899 million from the economy daily, according to the South African Reserve Bank in February 2023,” Richter continued.

The "Quiet Quitting" phenomenon

Quiet quitting, according to Richter, describes where employees are doing the minimum requirements of their jobs and not putting in more time, effort, or enthusiasm than absolutely necessary. This may be attributable to motivational levels, due to lack of development, career movement and in some cases where employees need to pick up additional responsibilities due to job freezes without receiving additional compensation.

“Employee loyalty levels are declining, as indicated by the survey conducted by the World Economic Forum (100 000 people surveyed in more than 10 countries). This impacts overall productivity levels, fuels the great resignation phenomenon and also has an impact on employee wellness,” emphasised Richter.

Post-pandemic workforce expectations

According to Richter, 66% of employees are looking for increased mobility and choice in where they are able to work, followed by 63% of employees indicating that they require more flexibility in their working environment. If employers are returning to pre-covid policies, this will fuel the “quiet quitting” phenomenon and overall productivity.

“Forty-nine percent of employees are no longer prepared to sacrifice their mental health and the same percentage of employers have indicated that there are more mental health challenges, cases of depression, substance abuse and burnout. Besides flexibility, employees are indicating that they need a greater focus on “lifework” balance,” said Richter.

“Globally, there is a greater focus on “lifework” balance and the overall employee value proposition. Sixty-one percent of the respondents in the April Salary and Wage movement survey indicated that they believe that specific initiatives such as the 4-day work week trials in certain industry sectors will improve wellbeing and employee performance,” added Richter.

Addressing other peripheral issues

“The relationship between employee and employer has changed. Innovative and progressive organisations are changing from an employee-centred value proposition to a human-centred value proposition that treats employees as people, not workers. Although this does not address the financial difficulties that employees are facing in the current environment, it certainly provides a healthier employee/employer relationship which will go a long way in addressing other peripheral issues, such as mental health to weather the storm South African organisations are facing,” concluded Richter.

Writer’s Thoughts

As inflation and economic challenges continue to affect the nation's workforce, do you believe employers are paying salary increases in line with the cost of living and inflation? Please comment below, interact with us on Twitter at @fanews_online or email me - myra@fanews.co.za

Comments

Added by du Toit, 28 Jul 2023
100% agree with your sentiment Humphrey.
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Added by Humphrey, 27 Jul 2023
No they are not and never have (at least not the last Corporate i worked for from 2012 to 2020). They also use CPI when in reality actual inflation experienced by the general populace is far higher.

The "Quiet Quitting" phenomenon: Quota systems as required by the ANC is to a large extent to blame. The currently disadvantaged (in terms of the system) have no reason to put in the extra effort and kill themselves (promotional prospects and high salary increases are limited and they do not get things like preferential share allocations etc.) whilst the currently advantaged (in terms of the system) know that their job is guaranteed, and promotional prospects are good (if they are even fractionally efficient), again so why kill yourself. Of course, this comment is a generalization and there are exceptions but the public sector where the "ANC utopian quota system is in full force demonstrates the lack of will to work with resulting inefficiency (aggravated further with unionized minimum salaries and increases irrespective of merit).
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