Theresa Blake, Manager of niche projects at 21st Century explains why…
21st Century conducts bi-annual surveys on salary increase trends and projections, across the national market. There is always a lot of interest in these results, but the current interest is huge. And for good reason!
These are very different times that we are living in, bringing a plethora of additional pressures for organisations to deal with. In many organisations, survival is still top of mind! The new way of work is putting pressure on organisations to formalise, as an example, Flexible Working Policies – ensuring that the deliverables are met, while considering the emotional wellbeing and safety of staff. On top of that, there is the complex issue of performance management from a distance.
As we enter the third wave of this pandemic, financial strain is adding to the pressure that employees and organisations are facing.
Annual headline inflation jumped to 4.4% in April from 3.2% in March, mainly driven by rising transport and food prices. This brings the average CPI for the first four months of 2021 to 3.42%. The average Bank inflation expectations are currently forecast at 4.25%, all in comparison to the 4.1% and 3.28% averages in 2019 and 2020 respectively.
21st Century’s April 2021 Salary Increase Trends Report provides the following basis for consideration in determining salary increase percentages.
Across each staff level (excluding CEO), the median actual increase reported is 1% lower than it was in April 2020 (for employers reporting on a Total Guaranteed Package approach).
Pay freezes are not the dominant approach and the prevalence has declined versus 2020, which supports the fact that employee wellness and engagement are one of the major trends facing organisations and their Remuneration Committees. We acknowledge that where an organisation is in survival mode and avoiding retrenchments, it is likely they will freeze increases as a mitigation measure.
Projected salary increases are typically also lower than they were in April 2020, by approximately 0.5% at the different staff levels.
General staff are hit harder by inflation because they spend a higher proportion of their income on consumable goods and therefore feel an impact on their disposable income.
A view of the percentage increase as an isolated percentage has real meaning when it is considered in context of a base figure of total guaranteed package. At Executive level this is a particularly complex balance of total guaranteed package, short term incentives and long-term incentives. Our team of experts can offer extensive experience in this regard. In particular, we offer a “LTI Valuator” which offers a value of the LTI portion of pay that the Executive may be walking away from, along with a comparison of the same portion in the market. It quantifies the value of the “at risk” portion of pay, which is a useful benchmark for both the individual concerned, as well as for the organisation. For a demo of our live database, go to https://www.rewardonline.co.za/ and see the demo link on the home page.