Longer-term impacts expected: growth in working from home, and a smaller pay gap between execs and workers
JOHANNESBURG, 24 April, 2020 — Three quarters (72%) of South African businesses are looking at cost saving measures around pay and recruitment to help survive the impact of COVID-19, according to research by Willis Towers Watson (NASDAQ:WLTW), a leading global advisory, broking, and solutions company, and P E Corporate Services.
When those 72% of firms looking at ways to save money were asked what options they are considering, 48% said an outright hiring freeze, stopping bonuses (41%), and making selective redundancies (24%).
The survey of 412 organisations showed that almost six out of ten firms (57%) are not going to award any pay rises this year because of the pandemic. However, 43% have budgeted for pay increases and are still planning to implement them, although those rises will generally be smaller.
Asked about any changes to their holiday policies, the majority (78%) of respondents said normal leave policy arrangements would remain in place, unaffected by the lockdown.
“Pay freezes are never popular but it could mean the difference between someone keeping their job or losing it.”
Melanie Trollip,
Director of Talent and Reward
Melanie Trollip, Director of the Talent and Reward team at Willis Towers Watson South Africa, said: “Businesses are under intense pressure and are looking for ways to survive the pandemic and to protect their staff. Pay freezes are never popular but it could mean the difference between someone keeping their job or losing it.
“The beginning of 2020 saw a surge in job-shedding across the economy, and many firms have now called a complete halt to hiring new staff. That will darken the outlook of a jobs market that was struggling even before COVID-19, with unemployment already at an alarmingly high level of 29%.
“Encouragingly, four out of ten businesses are pressing ahead with pay rises, but the amount they are offering is now around 1 to 1.5% lower than it would have been without the pandemic.
“Once South Africa emerges from lockdown, businesses will face a very weak global and domestic economy, and we think there will be some longer lasting changes around pay inequality. The gap between what executives and average workers get paid is likely to narrow as pay and bonuses come under pressure and scrutiny.”
The survey by Willis Towers Watson, which has a strong presence in South Africa, also looked at trends around working from home.
It showed that even prior to lockdown, flexible working was a feature of many South African businesses, as half (52%) of companies said they already had a policy that allows some people to work from home.
The need to stay away from the office wherever possible has driven the uptake of working at home, but not everyone is able to do so. A third (33%) of businesses said 75% or more of their staff were able to work from home, while 44% said that only up to 25% of their workforce is able.
To help their staff cope with lockdown, 79% of firms said they would be willing to cover the direct costs of homeworking, such as a laptop and broadband. Melanie Trollip commented: “Working from home was already growing in popularity, but COVID-19 has forced it to become the new norm. That behaviour will not be unpicked once the lockdown ends and businesses will expand their options around working from home. There are many benefits around greater employee flexibility, improved efficiency, and lower real estate costs.”
Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 45,000 employees serving more than 140 countries and markets. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential.
The survey was conducted by the Talent and Rewards Division of Towers Watson South Africa during the period 27 March to 06 April 2020, looking at the impact of COVID-19 on South African Business Policies. 412 responses to the survey questionnaire were received from organisations representing all sectors and business size. Responses were typically submitted by executives at the level of CEO, Managing Director, COO, CFO and HR Director/Executive.
