South Africans can expect a benchmark salary increase of between 6% and 6.5% in 2018, said Chris Blair, CEO of 21st Century, the largest remuneration consultancy in the country.
He added that those with lower salaries can expect a higher increase of between 6.5% and 7%. This is because of their higher cost of living, but it will still depend on whether their employer can afford it.
According to Alvin Liew, acting chief financial officer for Monash South Africa, salary increases are measured against the current inflation rate of the country.
“Annual increases are a form of protecting one’s income from macro inflationary pressures,” explained Liew. “Companies commonly implement an annual increase based on the projected inflation rate for the year and standard performance increment.”
He pointed out that this differs across industries and the increase depends on the performance of the company, its competitors, and the industry.
Salary trends to consider for 2018
Blair explained that the increased focus on equality, and therefore the wage gap, has influenced annual salary increases.
“Many organisations are spending a bigger portion of their increase pool on lower-level employees, offering them a higher percentage than the other levels. For example, in some organisations the executives may even take a 0% increase this year,” said Blair.
He pointed out that employees with scarce skills may receive a scarcity allowance on top of their annual salary increase.
“If there is no scarcity in the market for electrical engineers or marketing managers, and they are within the same paygrade, they will receive a similar increase – excluding performance.
“But if electrical engineers are scarce, they might receive a scarcity allowance on top of their general increase,” said Blair.
He advised companies to keep track of external market relativity and competitiveness through salary benchmark surveys. For more information, click here.
“When deciding on annual increases, it is important that organisations reference a local survey that is specific to the country in which they operate,” said Blair.
Should you negotiate with your employer?
If you are dissatisfied with the percentage increase offered by your employer, you can either try to negotiate a higher increase, or accept what you have been offered.
“It is important that employees understand how pay decisions are made in terms of the company strategy and its affordability issues, and this may negate their drive to negotiate,” said Blair.
“The ideal is to keep the communication positive and not adversarial. Unfortunately, organisations have the reality of affordability (and in some cases survival) and they may not be able to entertain changes,” he added.
If you would nonetheless like to negotiate with your employer, Liew suggests keeping the following in mind:
- Firstly, understand your organisation’s financial health, against the performance of its competitors and the general outlook of the industry it competes in. A negotiation for a higher salary increase against a backdrop of a poor performing organisation, increasing level of competition, or poor industry prospects would be counter-intuitive.
- Secondly, understand what your worth to your organisation is. You can do this by comparing the market-related compensation for your role and experience online or via salary reports produced by reputable recruitment firms. That way, you will be able to assess where you stand from a compensation standpoint against what the market is willing to compensate for the role you perform at your level of experience.
Is it your right to receive an increase?
Anne Grunow, human resources manager at Fedgroup, highlighted that employees need to be careful when trying to negotiate their salary increases.
“There’s no ‘one size fits all’ model that organisations generally adhere to, and it’s important to remember that employees do not have a right to an annual increase,” said Grunow.
However, she pointed out the follow exceptions. Employees have the right to an annual increase where the increase is:
- Stipulated in an employee’s contract of employment;
- Determined by a collective agreement between the employer and a trade union or by a bargaining council agreement; or
- Set down by a sectoral determination applicable to the sector within which the employer operates.
“That being said, good staff are hard to find – and it’s important to give them reason to stay,” she concluded.