SA firms ‘planning higher wages in 2013’

20 March 2013

Workers in South Africa can expect to see higher wage increases than their global counterparts in 2013, according to the latest Grant Thornton survey on international business trends.

Grant Thornton’s International Business Report, based on interviews of 3 450 chief executive officers in November and December 2012, indicates that 68% of South African businesses will increase salaries in line with inflation this year.

More than a quarter of South African businesses – 26% – will increase wages by more than the rate of inflation, while less than 5% will not increase pay at all, the report shows.

Only 15% of BRIC (Brazilian, Russian, Indian and Chinese) businesses, and 14% of global businesses overall, will offer increases higher than inflation in the year ahead, while approximately half the businesses in each of these geographical areas will offer increases in line with inflation.

“South Africa’s labour unions and collective bargaining councils ensure that employees get salary increases every year, which sets the tone for the private sector,” managing partner of Grant Thornton Cape, Ian Scott, said in a statement on Monday.

This was also reflected in Finance Minister Pravin Gordhan’s Budget Speech on 27 February, when Gordhan reaffirmed the government’s focus on poverty, unemployment and inequality eradication.

“We applaud government for raising this concern so vocally in the Budget Speech 2013,” Scott said.

“However, while pay rises are certainly a necessity to help eradicate poverty concerns, unrealistic wage hikes will only bring added pressure to an ailing economy.”

Scott said another concern to deal with was a skills shortage epidemic, which is exacerbated by lack of qualifications and experience. “South Africa urgently needs to address the enormous dichotomy between the skills shortage and unemployment,” he said.

“We need to find innovative solutions, for example, initiatives that allow a percentage of the total workforce to be treated more flexibly.”

The report also showed, however, that 43% of the country’s businesses hired more people and that Gauteng province saw the highest employment increases – 48%. This was in line with BRICS countries, which averaged a 45% increase.

Staff retention was also an area South Africa did well in. “When questioned about staff retention, more than a third of SA businesses (37%) experienced no staff retention problems, while only 7% of BRIC businesses claimed the same,” the report said.

Grant Thornton’s International Business Report surveys listed and privately held organisations and provides insight into the views of over 12 500 companies annually across 44 countries.

SAinfo reporter