 For many South Africans that are formally employed in both the government and private sectors, mid-year marks a pivotal time for mid-year salary reviews and potential raises. It is a time brimming with anticipation and hope, as employees look forward to some financial relief for their hard work and dedication.
However, the economic landscape is a complex and ever-shifting terrain. “Whilst the inflation outlook has improved over the last few months with CPI averaging 3.0% as at April 2025, there’s a lot happening both locally and globally that impacts employers’ ability to meet everyone’s salary increase expectations,” says Lindiwe Sebesho, Master Reward Specialist and Executive Committee Member at the South African Reward Association (SARA). She advises that employees manage their expectations by understanding the economic factors at play. This understanding can lead to more constructive and better-informed salary conversations, ultimately fostering a healthier employer-employee relations environment focused on driving much needed productivity for the country. Know the factors at play Employers' ability to increase salaries is influenced by several factors, including national and global economic growth prospects, company performance and affordability, as well as skills market trends. Inflation is expected to remain moderate and within the South African Reserve Bank’s 3-6% target range through 2025/26. However, even with recent cuts, interest rates remain high, making debt expensive for individuals and organisations alike, and leaving both employees and employers under financial strain. While we dodged the VAT bullet, the increase to the fuel levy will still hit everyone hard, from individual motorists to company and public service fleets. This cost might be offset by expectations of lower fuel prices but will still have an adverse impact on expenses. Additionally, rising food costs due to droughts and other climatic factors will put further pressure on budgets. Employers will also be hampered by weaker GDP growth than previously predicted, as well as global economic instability fuelled by US President Trump’s on-again-off-again tariffs. Tariffs on South Africa’s trading partners could create unwelcome local inflation, making organisations wary of committing to higher labour costs. "Considering the present economic circumstances, a balanced approach to salary adjustments is required. The intention is not to undervalue employees but to explore comprehensive strategies for improving the overall employee value proposition in a manner that ensures business sustainability and job security," says Sebesho. Given these facts, you may need more information to optimise your remuneration package beyond just a salary increase. Take a positive approach Despite economic pressures, you can improve your odds by taking some simple steps, such as:
Keep it real and respectful While you may be desperate for, expecting or even demanding an above-inflation increase, it is important to be realistic and, especially, respectful during a salary increase conversation. Employers are also strapped due to economic conditions and understanding their limitations without over-comprising yourself will be appreciated. Sebesho concludes, "It is essential to expect fair and equitable pay that allows you to participate effectively in the economy. However, understanding both perspectives is crucial for balanced salary adjustment negotiations that ultimately safeguard employment." She invites readers to engage constructively on the topic and to consider broadening remuneration insight through the SARA Thought Leadership Quarterly and the SARA conference (add links to website) ENDS MEDIA CONTACT: Idele Prinsloo, [email protected], 082 573 9219, www.atthatpoint.co.za For more information on SARA please visit: Website: www.sara.co.za X: @SA_rewardLinkedIn: South African Reward Association Facebook: SARA – South African Reward Association
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 South Africans can look forward to an average salary increase of 6% in 2024/2025 says Dr Mark Bussin, Master Reward Specialist and Executive Committee Member of the South African Reward Association (SARA).
“There is a glimmer of hope regarding GDP growth and, if we continue on this trajectory, it could mean the brighter future we’ve all been praying for,” he says. Salary increases may not be the only consideration in a robust total rewards programme, but they are definitely a cornerstone. For organisations, they’re also a key factor in business sustainability. Likewise, they are essential to employees who, due to inflation, become relatively poorer over the course of any given year. A timely salary increase helps them stay ahead of the cost of living and pursue a lifestyle they’re content with. Influences Typically, the start point for setting salary increases is the consumer price index (CPI). However, employers need to consider additional factors, such as:
Understanding these and other factors unique to their business helps employers take the guesswork out of salary increases. What to expect SARA’s data indicates that increases for 2024, by staff category, will look as follows:
The increase percentage above inflation is the employee’s real salary increase. According to Stats SA, inflation is currently 4.4%, so an increase of, say, 6% results in a real salary increase of 1.6%. SARB’s recent reduction in interest rates from 8.25% to 8% also improves the cost-of-living gap somewhat as workers will pay less to service their debt. However, according to Dr Bussin, it’s a thin silver lining as many employees remain over indebted while others continue to live in what he calls “in-work poverty”. “We need to aim for a living wage that allows workers to live with dignity,” he says. Rewards and growth While salary increases are a hot topic right now, Dr Bussin warns that remuneration and increases do not live in a silo. “The country needs growth, and growth needs skills and talent,” he says. “We have both, but we must unleash them by creating the correct government policy framework and certainty to support it.” Therefore, lawmakers need to urgently implement much needed policy reforms that will boost organisations’ ability to grow and hire unemployed people. ENDS MEDIA CONTACT: Idele Prinsloo, [email protected], 082 573 9219, www.atthatpoint.co.za For more information on SARA please visit: Website: www.sara.co.za X: @SA_reward LinkedIn: South African Reward Association Facebook: SARA – South African Reward Association |
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