South African employers plan to give their staff an average annual pay rise of 5.5% in 2022, according to research by global advisory, broking and solutions company Willis Towers Watson.
This is an improvement on the 4.7% average increase paid this year, and, with inflation forecast at 4.2% to 4.5% in 2022, provides a real increase of up to 1%.
The findings are based on responses from 320 organisations in South Africa.
Meanwhile, BankservAfrica’s Take-home Pay Index (BTPI) for September recorded the fastest year-on-year increase, of 13.5%, in the nominal average salary since January 2020.
Nominal average take-home pay reached R15 794 in September, or R13 047 in real terms (8.3% higher year-on-year).
However, BankservAfrica said this growth was the result of three short-term factors that were unlikely to be repeated. In fact, it expected average salaries to fall in the coming months (see below).
According to Willis Towers Watson, the proportion of businesses expecting to freeze pay altogether is set to fall from 12% this year to 5% in 2022.
However, it said some industries plan to be more generous than others. Average pay rises in 2022 are set to be higher in the medical technology (7.1%), pharmaceutical (6.1%), and consumer product (6%) sectors. Workers in business consulting (3.7%), energy and natural resources (4.1%), and construction (4.2%) are due to fare less well.
“The war for talent has continued despite the pandemic. In 2021, South African businesses tried to motivate and retain the top performers by giving them a pay rise that was 2.5 times greater than for staff on average performance ratings,” Willis Towers Watson said.
‘Extra payments’ to civil servants
BankservAfrica said 80% of the increase in September’s take-home pay was a result of more than 800 000 extra payments, mostly from government departments.
“These reflect the delayed implementation of the Public Service Co-ordinating Bargaining Council’s salary adjustment for civil servants for a cash allowance that is payable backdated from 1 April 2021 to 31 March 2022, according to its media statement.”
BankservAfrica said it believed the extra payments represented two payments: one for back dated payments and one for the most recent month’s increase.
Civil servants receive a cash allowance of at least R1 000 a month (based on a sliding scale). As these back date to April, BankservAfrica’s data showed 400 000 payments were made for the period April to August. According to its data, another 400 000 payments were made in September 2021.
The second reason for the steep growth in average salaries in September was the overtime paid to members of the South African Police Service and the South African National Defence Force for their extended duty during the unrest in July. This added almost R1 billion to the BTPI’s overall salaries, BankservAfrica said.
It said overtime pay on this scale is unlikely to occur any time soon. Although the security forces may be paid some overtime pay during the municipal elections on 1 November, it will not be to this extent.
BankservAfrica said the third factor was the low base for take-home pay in September 2020. Last year, when the economy began recovering, more casual employees – whose jobs were affected during the worst of the Covid-19 crisis – gradually returned to the workplace. As a result, the average take-home pay lowered from time to time during 2020.
BankservAfrica said these three factors indicated that average take-home pay will not increase at September’s rate in the next month or so.
“The worldwide supply chain issues and the shock from July’s unrest are likely to constrain economic growth and affect salary increases. We expect a downward adjustment in salaries in the coming months.”