Diverse economic realities are shaping compensation strategies across Africa. Results from the WTW 2025 Salary Budget Planning Report — Africa (July edition) reflect regional variations across the continent.
The results also provide a view into information on 2025 actual and 2026 planned salary increases, factors affecting salary budget changes, and salary review months, types and current and future status. Additionally, it is important to consider key economic data across regions by consumer price index (CPI), unemployment and gross domestic product (GDP) before diving into salary increases being budgeted across Africa. In this article, we explore these factors, as well as where employers across the continent need to focus.
Dynamics among CPI, unemployment and GDP growth across Africa’s regions create factors that are central to organisations’ salary budget planning.
West Africa stands out with the highest inflation, but moderate unemployment and relatively strong GDP growth signal significant wage pressure for employers (Figure 1). Southern Africa faces the highest unemployment and lowest GDP growth, underscoring the challenge of balancing wage increases with weak economic expansion. Central and North Africa both see elevated unemployment alongside moderate-to-high inflation, limiting salary growth despite modest GDP gains.
In contrast, East Africa displays a healthier profile, with moderate inflation and unemployment plus steady GDP growth, effectively creating a more stable environment for salary planning. Overall, regions with high CPI and low GDP (like Southern Africa) are likely to see salary increases lag inflation, while markets with robust GDP and controlled unemployment (like East Africa) are best positioned for real wage growth. This is an important context for HR and remuneration professionals who are making regionally nuanced salary budget decisions.
A critical component of compensation planning, the salary review cycle dictates when organisations evaluate and adjust their pay structures. In Africa, the timing and frequency of salary reviews can vary significantly by region and sector, often aligning with fiscal planning cycles, annual budgeting or collective bargaining agreements.
Understanding regional patters in the timing of reviews helps HR and reward professionals anticipate market movements and ensure their strategies remain competitive.
Among organisations in Africa that review salaries, most reported their review month to be April. September, November and December were the months with the fewest salary reviews (Figure 2).
We found that organisations across the regions essentially reported similar statistics regarding 2025 salaries that are subject to regular review. Small percentages in each region are experiencing pay freezes, with Central Africa having the highest rate and North Africa having the lowest (Figure 3).
We expect to see regions being more split in 2026. Overall, 50% of organisations across Africa reported that they expect salaries to remain subject to regular review. Inflationary pressures and anticipated recessions have weakened results and are an important factor that influence salary budgets. This uncertainty has resulted in half of organisations not having defined their review status for 2026 yet. Results show that Central Africa is overwhelmingly undecided about 2026 reviews, while the rest of the regions are more evenly split (Figure 4).
Salary-increase types in Africa include single budgets, CPI (cost of living), market, equity, collective agreements, merit, promotional and discretionary increases. Across all regions, merit-based increases are most common (67% to 76%) followed by promotional increases, especially in East and North Africa.
Single-increase budgets are highest in North, Southern and East Africa, while CPI-linked increases are most prominent in Central and Southern Africa. Discretionary increases remain least common and used to reward top performance, particularly where inflation is high.
Salary budget increases reflect how organisations are responding to evolving economic realities, including inflation, business performance and talent dynamics. Across Africa, these adjustments often are influenced by both local and global economic pressures as well as sector-specific challenges.
The largest actual salary increases for 2025 were in West Africa and North Africa, reflecting these regions’ high inflationary environments. East Africa followed, while Southern and Central Africa reported more modest increases (Figure 5).
An analysis of salary increases by employee type within each region shows little variation. This consistency suggests that salary adjustments are being applied across the workforce rather than targeted to specific segments (Figure 6).
Expectations for 2026 are mixed. East and West Africa anticipate slight decreases in salary increases compared to 2025, while Southern and North Africa project modest gains (Figure 7). These outlooks reflect ongoing economic uncertainty and region-specific challenges influencing salary planning.
Similarly, 2026 salary-increase forecasts show little differentiation between employee groups within each region, indicating a continued trend toward broad-based salary adjustments rather than targeted increases (Figure 8.)
When comparing current salary budgets with prior cycles, a significant portion of organisations in East, Southern and West Africa reported that their current budgets are lower than 2024. North Africa presented a more balanced picture, with respondents nearly evenly split between higher, unchanged and lower salary budgets year-on-year. This reflects diverse economic conditions and evolving business strategies across the continent.
When reviewing how these budgets change from the prior compensation planning cycle, East, North and Southern African organisations reported no change, while West African organisations had a more even split between no change in budget projections or budgets being lower than projected.
A range of economic and organisational factors shape salary budget decisions in Africa. The most common influences are inflationary pressures, concerns about recession or weak financial results, and cost management challenges. Figure 9 provides a regional breakdown of the primary factors affecting salary budgets in 2025.
Africa’s July 2025 Salary Budget Planning Report highlights not only the economic realities shaping compensation across the continent, it also reflects regional variations in inflation, unemployment and GDP growth. These factors present unique challenges, and most organisations are prioritizing merit-based increases and regular salary reviews to retain talent and remain competitive.
However, persistent inflationary pressures and concerns about economic performance continue to affect budget decisions, with many employers adopting a cautious outlook for 2026. For HR and remuneration leaders, a data-driven, regionally tailored approach is essential to navigating the evolving landscape and ensuring pay practices remain both sustainable and market-aligned.
