Like so many other countries and regions around the world, Africa has not been immune to economic volatility or talent attraction, retention and engagement challenges. In fact, employee attraction and retention is one of the most pressing challenges employers across the continent are facing, pushing them to look beyond pay to solve their talent issues.
While economic recovery in Africa seems to be on a path toward recovery, the extent of that recovery remains to be seen. Central Africa’s gross domestic product (GDP) rose from 2.6% to 4.1% last year, West Africa’s GDP grew from 3.3% to 4%, and Southern Africa’s GDP climbed from 3.6% to 4.2%. However, GDP growth is expected to slow for those same regions, with Northern Africa being the exception. See Figure 1.
Figure 1. Africa’s gross domestic product, 2022 and projected 2023
Bar chart showing the gross domestic product in 2022 and projected in 2023 for the following African countries
Algeria (2022) 3.8%, (2023) 2.3%;
Morocco (2022) -1.4%, (2023) 4.0%;
Tunisia (2022) 2.4%, (2023) 1.8%;
Ghana (2022) 3.6%, (2023) 2.6%;
Ivory Coast (2022) 5.7%, (2023) 5.2%;
Nigeria (2022) 2.8%, (2023) 3.0%;
Angola (2022) 2.5%, (2023) 2.9%;
Kenya (2022) 5.1%, (2023) 4.1%;
Tanzania (2022) 4.8%, (2023) 4.6%;
Mozambique (2022) 4.1%, (2023) 3.4%;
Mauritius (2022) 6.8%, (2023) 2.1%;
South Africa (2022) 1.6$, (2023) 1.0%
As in other regions around the world, inflation hit certain markets across Africa harder, with the most notable spikes in Ghana (29.6%) and Angola (22.4%), according to WTW’s December 2022 Salary Budget Planning Report. As a result, employers across Northern Africa and Sub-Saharan African regions are expected to implement a median salary increase of around 7% in 2023 for employees in production and manual labor up to executive roles, according to WTW's December 2022 Salary Budget Planning Report.
In fact, 82% of employers across these regions cited inflationary pressures as the top driver for salary budget changes, according to the Salary Budget Planning Report. Concerns over a tighter labor market came in second, influencing salary budget changes for 42% of employers. The third factor affecting salary budget changes for 22% of organizations was driving retention. Additionally, in 2023:
Additionally, employers in Sub-Saharan Africa are contending with an urgent need for talent with specialized technical skills. The rise in remote work opportunities since the pandemic coupled with organizations around the world looking beyond their borders for talent has resulted in a significant increase in experienced talent moving out of Africa to other developed economies. Among the top skills in demand are civil engineering, electrical technicians and artisans (e.g., electricians, mechanics, plumbers). With the exodus of more experienced talent, the region’s next generation of talent is in dire need of training and mentorship.
When a company’s best competitive advantage is its people, attracting and retaining key skills is critical, yet retaining top talent has been a significant challenge for organizations around the world. Facing a wave of economic and talent issues, most African organizations plan to maintain their headcount in 2023.
In response, African employers are planning to increase their budgets for pay raises to 6.1% in 2023, according to the Salary Budget Planning Report. That is a slight increase from the 5.9% average increase in 2022 salary budgets, and is being driven by three factors:
However, the impact of a depressed economic climate and difficult trading conditions have added increased financial pressures on organizations and put a spotlight on cost-control measures. Increasing salary budges is one tool employers can use to retain staff, but it isn’t a long-term or large-scale viable option.
As such, employers are getting creative in their approach to talent retention, looking beyond pay to meet employees’ changing expectations, including a better work-life balance, increased flexibility and professional development opportunities.
Just as every organization is unique, so too are the employees. When crafting a talent value proposition or employee retention strategy, it is critical to consider a broad range of factors that influence employee decisions about staying with an organization. This starts with putting an emphasis on employee listening to understand what employees value and how the organization can align its total rewards strategies, programs and practices with those values.
After getting a clear picture of what employees want and need, rather than assuming it, there are a variety of other differentiators that organizations can consider aside from pay increases:
Despite challenges to the economy, almost one-third (31%) of South African firms said their business outlook is better than forecasted, according to the Salary Budget Planning Report, and 49% percent said the outlook was in line with their expectations. While this optimism is a good sign for the future, there are many factors that influence employee engagement and business success. Pay is undoubtedly important in the talent value proposition, but equally important is the understanding that pay alone will not deliver the results organizations need to be successful in the long term.
