SA workers struggle to make ends meet as their pay increases dry up

South Africans are out of pocket and many are turning to debt to survive as salary increases either decline or are nonexistent, leaving many employees poorer. 

This is according to the latest salary and wage movement survey report released by Remchannel, a subsidiary of Old Mutual corporate, on Wednesday.  

The biannual internet survey which reviewed 65 organisations, including corporates, government employers and JSE-listed companies, revealed that many employers expect to increase their salary bills by 4%-6% in the next 12 months, which is substantially lower than the 7% inflation rate.  

Presenting the report, René Richter, MD of Remchannel, said the small salary increases that have worsened post-Covid are denting employees' disposable incomes and leaving many financially stressed. This also “puts pressure on companies to find new ways to keep staff engaged and to retain critical skills”.  

Employee categories under review included executives, managers, general staff and unionised staff, totalling 343,097. 

“Invariably, South African households are under pressure with the vast majority of blue-collar employees becoming poorer. If households want to climb out of this rut and gain more wealth, their income must increase by more than the consumer price inflation (CPI) rate,” she said. 

Richter said the economic climate continues its downward trajectory, helped by sustained load-shedding and expensive alternative energy. Production costs have escalated and are eating into profits, says Richter.  

“Organisations inevitably have tightened their belts to curb costs, which has affected salary increases which are now substantially below inflation.  At the same time, talent and specialist skills are scarce, and previously disadvantaged individual categories attract a premium.”  

The report revealed that despite the sluggish economy and fears of job losses, the “great resignation trend” continues to grip companies as employees affected by the lack of growth and their ability to meet financial obligations consider other ways to maintain their standard of living.  

About 44% of employees who resigned in the past two years did so for better career prospects, higher remuneration or improved working conditions. 

In their exit interviews about 9% of employees said they had experienced a toxic workplace while 20% said they experienced burnout, stress, career changes or emigration. A significant number of workers quit to be closer to home, for an improved work/life balance, or because of a change in personal circumstances.  

The majority, or 34%, of staff turnover was in sales, 26% was not categorised, 20% was in human resources and 13% was in administration. 

Of the 16.6% turnover rate, the two sectors with the highest resignation rates were  financial services (65.31%) and information and communications technology (ICT) at 55.81%. This was followed by retail/consumer manufacturing (34%) and the mining/technical/manufacturing sector (26.2%).     

Richter said the “great resignation” is ring-fenced in the professional and specialist roles of scarce skills in the market.  “Over the past three years we have seen the greatest loss of skills with more than 15 years' experience in the top management positions.” 

She said companies can do much more to quantify and contain costs and examine and curtail the high labour turnover.  

“It remains a concern that companies are not recording and analysing the reasons for their labour turnover or measuring the costs related to staff terminations and the subsequent replacement and recruitment of staff.”  

Richter said this untenable situation would force employers to reconsider their employee value proposition and retention policies to retain their brightest staff. Another factor employers needed to consider “is that the pandemic transformed the world of work”.  

Unlike before Covid, employee demands have now changed “and they demand what suits them rather than what suits employers”.  

About 66% of employees want increased mobility and 63% more flexibility. Most employees believe their productivity has increased in the work-from-home environment and they enjoy a better work-life balance.  

“Employees and jobseekers are prioritising how they want to structure their professional lives — frequently around their personal lives. When looking for jobs, they value personal success over professional wins.” 

The report noted that offering flexible work arrangements can involve a paradigm shift for organisations, especially smaller ones that may not have the critical mass of technology, budget, management and competitive flexibility necessary to make extensive use of flexible work arrangements.   

“Employees want more flexibility and mobility, so employers must adopt a collaborative approach with their current and prospective employees when considering which work model: office-based, remote or hybrid, is an inherent requirement of the job,” she said.  

“Whether through a remote or hybrid role, a flexible schedule, benefits that provide greater work-life harmony, or professional opportunities to keep employees engaged and fulfilled, employees quickly work out their work environment’s impact on their overall health and wellbeing,” Richter said.

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