South Africa
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Above-average pay hikes in store for workers in 2022

For those still holding down a job in SA’s embattled labour market, 2022 may bring good news as local employers are pencilling above-inflation wage increases for staff, while the number of companies planning to freeze salaries is set to decline. 

SA firms are navigating a fraught recovery from the pandemic, which decimated growth and drove unemployment levels to a record-high 34.4%. 

However, research compiled by advisory firm Willis Towers Watson shows that local employers intend to give staff an average annual pay rise of 5.5% in 2022, up from 2021’s 4.7%.

The proportion of firms that are expecting to freeze pay is set to fall to 5% in 2022 from 12% this year, according to its latest salary budget planning report, which surveys companies from 130 countries worldwide, including 320 SA-based firms.

“Businesses are navigating a tentative recovery from the pandemic, and it is encouraging that many are planning to offer more generous pay rises,” Melanie Trollip, director of talent and reward at Willis Towers Watson SA, said in a statement.

“The thaw in pay freezes will be welcome and many people can expect next year’s pay rise to be an improvement on this year.”

In the midst of the jobs fallout the survey found that competition for skilled workers remains intense — with firms giving top performers a pay rise that was two-and-a-half times greater than staff on average performance ratings in 2021. 

“Even though Covid-19 wreaked havoc on our economy, firms still had to compete to attract and retain the top performers, and higher pay rises were part of that strategy,” Trollip said. “Now that we may be entering a recovery phase, these high performers are especially important for driving business growth.”

The SA Reserve Bank forecasts inflation will average 4.2% in 2022, indicating real average pay hikes in the region of 1%.

On a sectoral basis, the medical technology, pharmaceutical, and consumer product sectors are planning increases of 7.1%, 6.1% and 6%, respectively. Employees in business consulting, energy and natural resources, and construction, property and engineering will not see such generous hikes, with average increases of 3.7%, 4.1% and 4.2% planned. 

This data which covers mostly private sector firms, comes as public sector workers struck a deal with government this year for a 1.5% pay increase accompanied a cash gratuity of R1,000 after tax, for all staff below management level.

This comes as public sector workers struck a deal with government this year for a 1.5% pay progression increase accompanied a cash gratuity of R1,000 cash after tax, for all workers below the management level.

That deal will cost the state an additional, unbudgeted R18bn to cover the cash gratuity — which is reported to be better than an inflation-linked increase and ensured that the lowest paid staff received an effective 11% increase. Public sector unions have said they will fight hard to win greater increases in 2022.

donnellyl@businesslive.co.za