As inflation continues to rise and labour markets tighten, South African organisations have critical decisions to make in planning this year’s salary budgets. WTW’s 2024 Salary Budget Planning Report – Africa (December edition) reveals insights that can help you navigate these challenges and stay competitive.
Insights into actual 2024 increases and 2025 forecasts from across Central, East, North, Southern and West Africa regions offer valuable perspectives. HR and remuneration professionals have an opportunity to consider this data against an evolving compensation landscape and determine the implications for their organisational strategy.
This analysis of the December 2024 edition of the Salary Budget Planning Report encompasses multiple dimensions of salary planning, including review methodologies, implementation status, and both current and projected budget allocations. Additionally, this analysis delves into key factors influencing pay decisions, including market conditions, recruitment patterns and employee turnover rates.
Finally, we home in on South Africa’s position within this broader context, exploring how local market dynamics and industry-specific factors influence salary planning. By understanding these trends together, you can better position your organisation to make informed decisions about your compensation strategies.
In 2024, South African organisations averaged lower salary increases across all industries as compared to the African continent, and a decrease is projected for 2025 (Figure 1). Among South African businesses, 95% reported having regular salary reviews, and 1.9% are expecting salary freezes.
South African organisations reported an average of 5.9% across all industries in 2024. However, differences are apparent when looking at a breakdown by industry. Specifically addressing 2025 predictions, salary increases in South African organisations across all industries is 5.7%, a 0.2% decrease from 2024 (Figure 2).
| Industry | 2024 actual | 2025 projected |
|---|---|---|
| Wholesale trade, nondurable | 5.7% | 5.9% |
| Wholesale trade, durable | 6.5% | 6.4% |
| Transportation | 6.0% | 5.3% |
| Technology / media / telecommunications | 5.4% | 5.2% |
| Software | 4.8% | 5.4% |
| Retail and distribution | 6.2% | 6.2% |
| Public sector and education | 5.8% | N/A |
| Pharmaceuticals and life sciences | 5.9% | 5.9% |
| Pharmaceuticals and biotechnology | 5.7% | 5.9% |
| Oil and gas extraction | 5.4% | N/A |
| Medtech | 5.6% | 5.6% |
| Manufacturing, nondurable | 6.0% | N/A |
| Manufacturing, durable | 6.0% | 6.2% |
| Manufacturing | 6.1% | 6.1% |
| Leisure | 6.0% | N/A |
| Insurance | 5.9% | 5.9% |
| Healthcare | 5.5% | 5.4% |
| Food and related products | 5.8% | 5.7% |
| Financial institutions | 5.1% | 5.0% |
| Energy and natural resources | 5.9% | 5.8% |
| Electronic, electrical equipment and components | 5.8% | 5.5% |
| Construction | 8.2% | 6.2% |
| Chemicals and related products | 5.9% | 5.8% |
| Business services | 5.6% | 5.8% |
| Agriculture, food and beverage | 5.8% | 5.4% |
Relative stability is expected in South Africa this year, with most industries reporting the same or slightly higher increases in 2025, except for:
Inflationary pressure and cost management topped the list of concerns among South African organisations across all industries. These were followed by stronger financial results as well as anticipated recessions or weaker financial results (Figure 3).
High inflation concerns reflect how organisations must carefully consider inflation when planning salary budgets, particularly given South Africa’s historical inflation patterns and the South African Reserve Bank’s (SARB’s) target range of 3% to 6%. To retain talent, organisations are balancing inflation’s impact on employee purchasing power with operational cost constraints.
The high percentage of organisations citing cost management suggests they are grappling with multiple cost pressures beyond just salary considerations. Rising utility costs, particularly electricity due to load shedding, are likely contributing to this concern. Companies are seeking to balance competitive compensation with overall operational sustainability.
This moderately positive outlook indicates some business confidence despite challenging conditions. Organisations anticipating growth are likely planning for strategic hiring and retention through competitive compensation. This may reflect sector-specific optimism in certain industries that are showing resilience or growth.
The lower percentage reflected suggests that, while economic challenges exist, most organisations aren’t expecting severe downturns. This concern may be influenced by global economic uncertainties and their potential impact on South African markets. Organisations expressing this concern are likely to be more conservative in their salary budget planning.
A competitive talent market, particularly for scarce skills, continues to influence salary budget decisions. Regulatory changes and minimum wage requirements play a role in salary planning. Industry-specific factors, such as technological disruption and skills requirements, affect how organisations approach salary budgets. The impact of load shedding on productivity and operational costs influences overall budget allocation decisions.
While we know that the primary concerns among South African industries focus on inflationary pressures and cost management concerns, there are nuances for each industry and its unique landscape.
Despite these nuances, South African businesses overall appear to be bracing for added pressures related to inflation as well as cost management (e.g., rising cost of supplies).
Having a single, reliable source for insights into salary movements and economic indicators, including inflation and employment rates, is critical for making informed decisions that withstand scrutiny. As organisations begin to explore implications of the pay transparency and pay equity movements, ensuring you have the data you need will be fundamental to thoughtful, strategic and competitive pay programs.
