How likely are salary increases for South Africans in 2023?

It has been three years now since the Covid-19 pandemic arrived and caused havoc in South Africa.

The lockdown that was enforced led to many losing their jobs or having their salaries cut.

Impact of Covid-19

In the years that followed, businesses struggled to stay afloat, which meant employees had to dampen their expectations of getting salary increases.

Although the country is not yet out of the woods, there are some signs that South African businesses are starting to recover.

Are salary increases likely?

Executive member at the South African Reward Association (SARA) Mark Bussin says South Africans shouldn’t be too hopeful.

“Unfortunately, the current state of South Africa means the financial outlook for companies is generally bleak and this will have a direct impact on their ability to offer any kind of meaningful increases to employees,” said Bussin.

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How salary increase decision will be impacted

Since 2020, South Africa’s economic growth has been below par – heavily affected by Covid-19 but also being hit by continuous bouts of load shedding, flooding in KZN, high unemployment and rising inflation. The country’s poor economic conditions are not expected to improve much in 2023.

“Salary increase decisions may be affected by factors that contribute a lot in the country’s economic downfall which may impede employers’ ability to make favourable increase decisions such as economic growth,” said Bussin.

“High inflation in South Africa is also be one of the contributors to the economy’s downfall as it lowers the real minimum-wage around the world, meaning it decreases the value of the minimum wage and lowers the standard of living even more for those who rely on it,” he added.

The impact these factors will have on employers’ ability to make increase decisions

Bussin said South Africa’s unemployment rate and competition for labour means salary increases are less likely.

“These will also adjust the amount and frequency of [bonus] payouts based on the company’s financial performance, and possibly opt to reduce or eliminate bonus and incentive payouts altogether to reduce costs, save money and maintain financial stability,” he said.

ALSO READ: New minimum wage could increase domestic workers’ salaries to R25 an hour

What needs to happen for the situation to improve?

Bussin said to restore investor confidence in South Africa the government must take steps to eliminate corruption, reduce red tape and help manage government’s debt.

“Fixing the issues of overhauling the education system entirely, encouraging entrepreneurship, addressing the inequality gap and managing the government debt can win back the foreign investors’ trust so that the economy can grow and be stable again.”

Bussin said South Africa needs “proper political, legal and socio-economic foundations” before employees can start seeing light at the end of the tunnel.

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