3 factors driving Southern Africa’s salary budgets

Economic uncertainty, a fierce competition for talent and changing expectations from the workforce have hit Southern African organizations and pushed employers in the region to re-adjust their salary budgets. For example, overall actual salary budget increases in Africa rose 7.4% this year (including salary freezes) and 7.8% (excluding freezes), according to our most recent Salary Budget Planning Survey Report.

Looking more specifically, Angola is at the upper end of salary budget increases at 9.6%, while Mozambique fell at the other end of the spectrum with an average 5.6% actual salary budget increase. In line with the rest of the globe, forecasted salary budget increases for 2024 are lower than 2023.

2024 average salary budget increases are projected at 6.2% in Southern Africa (including salary freezes) and 6.4% (excluding freezes). Angola takes the top spot, forecasting an 8.2% salary budget increase, while Mauritius is reporting just 4.4%.

In Southern Africa, the survey results reflect higher 2023 salary increases than were projected during the 2022 compensation planning cycle. Additionally, increases for the current cycle are either higher than projected than or did not change since 2022. Comparatively few organizations reported that 2023 salary increase budgets were lower than projected. Average actual salary increases hit 7.4% in 2023 in Southern Africa, and projections show that compensation and HR professionals expect pay increases to remain high (6.2%) next year.

Factors at play

Among organizations that reported higher 2023 actual salary budgets vs. their original projections, three factors stood out as the primary influences affecting salary budgets.

Designing rewards that work

As employers in Southern Africa look for ways to effectively spend their compensation while staying within budget, it will be important to remember who they need for future success and, based on those needs, make decisions about how that talent will be paid.

For example, organizations that plan to increase their headcounts in the next year are looking for mostly production and manual labor first, with middle management and professional roles following. Additionally, recruitment efforts will weigh heavily toward engineering and IT roles, including a high demand for skilled engineers and IT professionals who will support digital transformation, the growth of the technology sector and the need for innovation.

The best way to balance and justify the way you spend your compensation budget will be to make decisions based on the most reliable, relevant and timely data available on the market. Otherwise, those factors that are currently plaguing employers will continue to undermine attraction, retention and motivation efforts, causing organizations to fall short of expectations.