A biannual survey from Remchannel, a division of Old Mutual, shows that average salary hikes this year have beaten the rise in the consumer price index.
However, this alone may not adequately address the challenges of the cost of living, considering the significantly higher increases in food prices, electricity, and fuel costs.
According to their April 2024 salary and wage survey, released biannually in April/May and October/November, the average pay raises granted by local companies this year averaged 6.09%, exceeding both the average CPI (5.45%) and projected increases (5.85%).
The Remchannel survey involved 55 participants representing approximately 417,000 employees across various sectors: unlisted (60%), JSE-listed (25.5%), government and quasi-government (7.25%), and dual- or offshore-listed (7.25%).
The report highlights a persistent trend where the escalation in the cost of essentials has consistently outpaced the CPI for several years.
For instance, in 2023, while headline CPI averaged around 6% annually, food inflation averaged 10.9%, and electricity and fuel price hikes averaged 11.8%.
Lindiwe Sebesho, managing director of Remchannel, stressed during a recent roundtable discussion that adjusting salaries constitutes just one aspect of the solution.
She emphasised the pressing need to address the rising cost of living, particularly for essentials like food, electricity, and transportation, which are escalating at rates well above both inflation and salary increases.
This economic scenario, Sebesho pointed out, perpetuates challenges such as high indebtedness among individuals, despite the recent alignment of salary increases with core CPI.
The escalating cost of living in South Africa is compelling businesses to rethink their talent retention strategies by revisiting their employee benefits offerings.
Sebesho noted that while many employers may struggle to afford higher salary increases, they recognise the importance of supporting employees in managing their finances to break free from debt cycles.
A growing trend observed among employers is the provision of earned wage access, allowing employees to access their earned pay before the traditional monthly payday.
"We're seeing more employers giving employees early access to their salaries, known as earned wage access, subject to financial education. This means that employers are now paying workers more frequently than once a month, helping them manage their needs more effectively."
Additionally, employers are increasingly offering soft loans with favourable terms compared to conventional bank loans, including lower interest rates and flexible repayment options.
Samantha Jagdessi, head of strategy at Old Mutual Corporate Consultants, highlighted how employees are leveraging the flexibility in their pension contribution plans to maximize their take-home pay.
However, she stressed the importance of ensuring that employees are well-informed about the implications of their choices on their retirement outcomes, urging employers and HR managers to provide necessary education and information to their workforce.
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