Spotlight on Africa: Highlighting the factors driving salary budgets

Despite concerns about tight labour markets and escalating inflationary pressures, employers across Africa planned for 2024 salary budget increases that were in line with 2023 increases, a noteworthy trend given that last year broke nearly two decades of flat increases.

Overall salary budget increases rose 6.5% in 2023, according to WTW’s Africa edition of the December Salary Budget Planning Report. That is the same increase organizations across the continent projected for this year. Regionally, North and East Africa planned the biggest increases, and Central Africa planned the lowest.

A closer look at the numbers

This year, organizations forecasted average salary budget increases (including salary freezes) at:

• 4.0% in Central Africa
• 6.7% in West Africa
• 7.6% in East Africa
• 8.2% in North Africa

Every region, except for West Africa, planned for the same increase (or within 0.5%) of 2023 actuals (see Figure 1).

In terms of salary review status for the continent, 55% reported having regular salary reviews and 43% were not yet defined. Less than 2% said they postponed salary reviews, and fewer than 3% had instituted a pay freeze.

Additionally, the survey results found that budgets in Africa were unchanged for 32% of organisations. 27% were higher than in 2023 and 23.6% were lower.

Similarly, 31% and 30% of organisations, respectively, said that budgets were unchanged or lower than projected for the current cycle compared with prior budget projections. Central and West Africa, largely, are seeing lower than projected budgets, while Southern, North and East Africa see no change (see Figure 2).

Factors affecting salary budgets

The dynamics of the African job market paint a complex picture. While economic growth holds promise, several key factors are influencing salary budgets and increases across the continent. Following are the four crucial elements shaping the compensation landscape.

A competitive market requires a strategic approach

Whether competing for talent within their industry, across industries or even across geographies, employers in Africa are increasingly leveraging their salary budgets to attract and retain the key talent they need for business success. However, organizations need a foundation of reliable data for responsible and defensible planning that meets employee expectations, considers pay transparency and equity, and is balanced against cost containment needs.

Understanding this need, WTW produces a biannual global Salary Budget Planning Report. Participants in the survey, which is fielded mid-year and end-of-year, receive a complimentary copy of the report as well as reports for any of the countries in which they participate. If you would like to participate in this year’s surveys, visit wtwco.com/SalaryBudgetPlanningSurvey.

This article first appeared in HR Future Magazine on hrfuture.net.