Persistent inflationary pressures, the rising costs of management, concerns over a tightening labour market and the anticipation of strong financial outcomes are the most influential factors affecting salary budgets across Africa, according to WTW’s 2024 Salary Budget Planning Report – Africa (December edition). Understanding these elements is essential for organisations that aim to navigate the intricacies of compensation planning in this evolving environment.
Overall salary budgets rose 6.1% across Africa in 2024 and are predicated – on average – to rise 6.7% in 2025. These increases are down from the 7.7% that organisations were predicting in July 2024.
Regionally, North Africa saw the biggest salary increases in 2024 (7.8%), followed by East Africa (6.9%), West Africa (5.9%), Southern Africa (5.2%) and Central Africa (4.9%).
North African businesses are predicting stability in their 2025 salary increases, but the remaining four regions reported expending to increase salaries this year. West African countries are expecting the highest increases (from 5.9% in 2024 to 7.5% in 2025), followed by East and Central Africa. Southern Africa is expecting to increase 0.1% -- reflecting nearly no change for 2025 (Figure 1).
As organisations navigate the complexities in the African job market, it is clear that effective planning is essential for future success. Although economic growth presents opportunities, several critical factors are shaping salary budgets and adjustments across the continent (Figure 2).
Inflation had a significant impact on salary budgets across various African regions in 2024. This showcases the widening gap between inflation rates and projected salary increases.
For instance, East and West Africa are severely affected, with inflation rates of 10.1% and 14%, respectively, while salary increases are lagging at only 6.9% and 5.9%. In contrast, Central Africa’s salary increases (4.9%) display an adjustment closer to inflation (3.1%). North Africa saw an average inflation rate of 9.3% but lowered salary increases to 7.8%. Countries in Southern Africa averaged 6.9% inflation, but only had an average 5.2% increase in 2024 (Figure 3).
Unless inflation decreases across all African regions in 2025, salary budgets likely will continue falling below inflation. Expected salary budgets will only moderately increase, but still fall below 2024 inflation rates (Figure 4).
These trends underscore the challenges employers face in addressing cost-of-living pressures while managing wage expectations. This year’s forecast shows persistent inflationary pressures across Africa and is expected to exceed salary increases in most regions.
Southern Africa came in hot with concerns about a tighter labour market, with 54% of organisations in the region citing this as a primary concern when planning salary budgets (Figure 6.) These variations highlight the diverse labour market conditions across the continent, with some regions expecting tighter workforce competition.
Whether actual or planned, 39% of East African organisations are anticipating stronger financial results. North and West African organisations come in a close second, with Southern Africa coming in last (Figure 7). These numbers reveal varying levels of business confidence across the content as companies navigate 2025 economic conditions.
When reviewing factors affecting salary budgets across Africa as a whole, we see unanimity in citing inflationary pressures. However, each region’s secondary concerns differed (Table 1).
| Region | Secondary concern | Tertiary concern |
|---|---|---|
| Central Africa | Labour market (33%) | Cost management (32%) |
| East Africa | Anticipated stronger financial results (39%) | Cost management concerns (38%) |
| North Africa | Cost management (41%) | Anticipated stronger financial results (38%) |
| Southern Africa | Labour market (54%) | Cost management (29%) |
| West Africa | Cost management (41%) | Anticipated stronger financial results (38%) |
Factors related to expected recessions or fundamental compensation strategies were, favourably and noticeably, absent.
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.
