Can Employees Expect an Annual Salary Increase Post-2020?

South African employers are still feeling the pinch due to the lasting effect of the pandemic on the economy. Is it right for employees to expect their customary annual increase, in 2020 and next year?

With two months left until the end of this unusually challenging year, most employees who were lucky enough to keep their jobs are wondering whether it’s fair to get their year-final bonus or raise, especially if this is a long-time tradition for their company.

A survey by UK insurance and advisory firm Willis Towers Watson of top local South African companies (cited by businessinsider.co.za), showed that employers had generally lowered the annual rise budgets by 20%, from the projected 6,8% to 5,5% (which is still above the average estimated 4% inflation).

Notably, one in five surveyed companies has opted for no pay increases this year for their employees, blaming the pandemic aftermath. A similar number of companies were either cutting bonuses or delaying their payouts until the coming year.

Furthermore, the Willis Towers Watson’s Salary Budget Planning Report, which studies pay budgets in organisations, revealed that South African companies are prepared to offer an average pay rise of 5,7% in 2021.

This should not come up as a completely surprise. Some surveyed companies cited previous multi-year pay rise agreements and a need to retain the remaining workforce (following staff cuts and the downsize in new recruitment).

The bottom line: If you are an employee looking forward to a raise or festive season bonus, you may need to temper your expectations. The current recessionary economic environment is not one that favours generous pay rises (although an above-inflation rate is always welcome). Speak to your employer if you have any salary concerns.

Cash-strapped business owners may want to delay yearly bonuses or pay lower raises than initially anticipated if the budgets allow. If you are an employer worried about keeping your best staff, opt for a target-based performance bonus to incentivise the employees who worked hard during the lockdown.

Professional Sourcing can assist with the recruitment process during and after the pandemic. Our team has a strong reputation for recruitment expertise within our specialisation areas. Visit prosourcing.co.za for more info.

Professional Sourcing has a strong reputation for highly developed recruitment expertise within our specialisation areas. We develop strong long-term relationships with our loyal clients. Allow us to help you deal with your frustrations of a lengthy hiring process.

Professional Sourcing is a top-tier South African-based recruitment agency operating internationally, IPM accredited, LEVEL 2 BEE RATED and 51% Black Owned.