October 9 2007
By Gershwin Wanneburg
South African executives' basic salaries rose by more than seven percent in the past year as companies tried to hold onto skilled labour, in particular a small pool of black professionals, a new study said.
The increases were just above the current rate of inflation but higher than companies had expected they would need to pay to prevent a high turnover, consultancy firm Deloitte said.
Average staff turnover among companies surveyed between August 2006 and July this year eased to 10.5 percent, from 13.5 percent. But resignations among local CEOs reached record levels, in line with a global trend, the annual survey found.
The staff crisis in the financial and manufacturing sectors -- two of the economy's biggest -- poses a challenge for the government as it tries to upgrade skills and counter a brain drain that has seen white professionals leave for overseas.
"Although participants had predicted average increases of between 6 and 7 percent in guaranteed package, the increases that were actually awarded were higher than anticipated," said Louise Marx, manager for Human Capital at Deloitte.
"Once again, market forces dictated that adjustments and premiums were required to attract and retain top talent. Predictions for 2007/2008 are that executive guaranteed package increases will range between 7.0 and 8.0 percent," she said in a statement.
South Africa's annual CPIX inflation -- which breached the central bank's 3-6 percent target range for the first time in April this year -- slowed to 6.3 percent in August from 6.5 percent in July.
South Africa's economy is experiencing one of its longest growth periods ever, and the government wants to sustain that in order to reduce widespread unemployment and poverty.
COMPETITION FOR BLACK SKILLS
The government is spending billions of dollars on electricity and transport networks in order to create jobs and upgrade infrastructure needed to stimulate the economy. But the expertise to realise those goals is in short supply.
Experienced white professionals have left in droves to escape high levels of crime and affirmative action policies that have made it more difficult for them to find jobs. Analysts also say post-apartheid South Africa is struggling to produce an educated class among the black majority.
That poses a dilemma for authorities who are pushing companies to appoint more blacks to senior positions through affirmative action policies.
Deloitte said more than half of about 400 firms polled said they found it difficult to retain black executives. More than a third complained about poaching by companies vying for blacks, who regularly changed jobs in search of better pay.
As a result, salaries may continue to rise at a rapid rate.
South Africa's central bank has warned about the inflationary impact of hefty raises. Deloitte said a massive strike by civil servants earlier this year created pressure for wage hikes in other sectors.