Skip to main content
main content, press tab to continue
Article | Beyond Data

Economic and labor market impacts on employee attraction and retention in Africa

By Deirdre Van Greunen and Melanie Trollip | March 8, 2023

Finding and keeping employees is more challenging than ever, and it’s pushing African employers to look beyond pay to solve their talent issues.
Compensation Strategy & Design
Beyond Data

Like so many other countries and regions around the world, Africa has not been immune to economic volatility or talent attraction, retention and engagement challenges. In fact, employee attraction and retention is one of the most pressing challenges employers across the continent are facing, pushing them to look beyond pay to solve their talent issues.

The economy and its impact on pay and hiring

While economic recovery in Africa seems to be on a path toward recovery, the extent of that recovery remains to be seen. Central Africa’s gross domestic product (GDP) rose from 2.6% to 4.1% last year, West Africa’s GDP grew from 3.3% to 4%, and Southern Africa’s GDP climbed from 3.6% to 4.2%. However, GDP growth is expected to slow for those same regions, with Northern Africa being the exception. See Figure 1.

Figure 1. Africa’s gross domestic product, 2022 and projected 2023

Africa’s gross domestic product in Northern Africa 2022: 1.6% and projected in 2023: 2.7%, West Africa 2022: 4.0% and projected in 2023: 3.6%, Central Africa 2022: 4.1% and projected in 2023: 3.9%, Southern Africa 2022: 4.1% and projected in 2023: 2.1%
Source: WTW 2022 Salary Budget Planning Survey – Global (December)

Bar chart showing the gross domestic product in 2022 and projected in 2023 for the following African countries
Algeria (2022) 3.8%, (2023) 2.3%; Morocco (2022) -1.4%, (2023) 4.0%; Tunisia (2022) 2.4%, (2023) 1.8%; Ghana (2022) 3.6%, (2023) 2.6%; Ivory Coast (2022) 5.7%, (2023) 5.2%; Nigeria (2022) 2.8%, (2023) 3.0%; Angola (2022) 2.5%, (2023) 2.9%; Kenya (2022) 5.1%, (2023) 4.1%; Tanzania (2022) 4.8%, (2023) 4.6%; Mozambique (2022) 4.1%, (2023) 3.4%; Mauritius (2022) 6.8%, (2023) 2.1%; South Africa (2022) 1.6$, (2023) 1.0%

As in other regions around the world, inflation hit certain markets across Africa harder, with the most notable spikes in Ghana (29.6%) and Angola (22.4%), according to WTW’s December 2022 Salary Budget Planning Report. As a result, employers across Northern Africa and Sub-Saharan African regions are expected to implement a median salary increase of around 7% in 2023 for employees in production and manual labor up to executive roles, according to WTW's December 2022 Salary Budget Planning Report.

In fact, 82% of employers across these regions cited inflationary pressures as the top driver for salary budget changes, according to the Salary Budget Planning Report. Concerns over a tighter labor market came in second, influencing salary budget changes for 42% of employers. The third factor affecting salary budget changes for 22% of organizations was driving retention. Additionally, in 2023:

  • Organizations in nine African markets will ramp up recruitment at all organizational levels, from manual labor roles through professional and management levels
  • More than half (58%) of engineering companies in seven markets plan to increase their headcount
  • About half of information technology companies in four markets plan to recruit more employees

Additionally, employers in Sub-Saharan Africa are contending with an urgent need for talent with specialized technical skills. The rise in remote work opportunities since the pandemic coupled with organizations around the world looking beyond their borders for talent has resulted in a significant increase in experienced talent moving out of Africa to other developed economies. Among the top skills in demand are civil engineering, electrical technicians and artisans (e.g., electricians, mechanics, plumbers). With the exodus of more experienced talent, the region’s next generation of talent is in dire need of training and mentorship.

How employers are responding

When a company’s best competitive advantage is its people, attracting and retaining key skills is critical, yet retaining top talent has been a significant challenge for organizations around the world. Facing a wave of economic and talent issues, most African organizations plan to maintain their headcount in 2023.

In response, African employers are planning to increase their budgets for pay raises to 6.1% in 2023, according to the Salary Budget Planning Report. That is a slight increase from the 5.9% average increase in 2022 salary budgets, and is being driven by three factors:

  • Concerns about inflation (78%)
  • A challenging labor market (37%)
  • Employee retention (30%)

However, the impact of a depressed economic climate and difficult trading conditions have added increased financial pressures on organizations and put a spotlight on cost-control measures. Increasing salary budges is one tool employers can use to retain staff, but it isn’t a long-term or large-scale viable option.

As such, employers are getting creative in their approach to talent retention, looking beyond pay to meet employees’ changing expectations, including a better work-life balance, increased flexibility and professional development opportunities.

Take a broader view of talent attraction and retention

Just as every organization is unique, so too are the employees. When crafting a talent value proposition or employee retention strategy, it is critical to consider a broad range of factors that influence employee decisions about staying with an organization. This starts with putting an emphasis on employee listening to understand what employees value and how the organization can align its total rewards strategies, programs and practices with those values.

After getting a clear picture of what employees want and need, rather than assuming it, there are a variety of other differentiators that organizations can consider aside from pay increases:

  • Organizational culture: Treat employees with dignity and respect, and demonstrate clear values of inclusion, diversity and fairness as part of a broader environmental, social and governance (ESG) strategy
  • Onboarding: Create a sense of belonging by inducting and orienting new hires, providing onboarding buddies and mentorship/guidance from leaders to ensure quick integration
  • Professional development/upskilling: Go beyond educational assistance by developing career paths that support employees’ professional development (including activities such as attending professional events) and developing a clear policy for internal promotions
  • Leadership: Effectively connecting with employees and demonstrating appreciation of employees’ efforts and contributions are critical for employee engagement, motivation and commitment
  • Flexible work arrangements: Maintaining a healthy work-life balance, which is essential to job satisfaction, can be challenging at a time when working from home is at an all time high, so encourage employees to set boundaries and take their paid time off
  • Wellbeing: Wellbeing offerings that intensified during the pandemic are expanding in leading organizations and go beyond physical fitness to include mental, financial and social components as well
  • Flexible pay and benefits: As employers increase employee listening efforts, they are learning that different employee demographics have different needs and this is leading to a review of traditional pay and benefits to consider different – and more effective – ways of delivering these programs
  • Communication: Employee engagement depends heavily on the workforce feeling informed and included, and this makes the efficacy of communication more critical than ever, particularly given new remote or hybrid working arrangements

Prepare for the future

Despite challenges to the economy, almost one-third (31%) of South African firms said their business outlook is better than forecasted, according to the Salary Budget Planning Report, and 49% percent said the outlook was in line with their expectations. While this optimism is a good sign for the future, there are many factors that influence employee engagement and business success. Pay is undoubtedly important in the talent value proposition, but equally important is the understanding that pay alone will not deliver the results organizations need to be successful in the long term.


Senior Associate, Rewards Data Intelligence
email Email

Melanie Trollip
Director of Work and Rewards, South Africa
email Email

Related content tags, list of links Article Beyond Data Compensation Strategy and Design Beyond Data
Contact us