Share

Expect average pay increases of 3% or less in 2018

Cape Town - Employees can expect an average salary increase of about 3% in 2018, according to the 2018 Compensation Best Practices Report by American company PayScale.

South African companies also took part in this global survey.

About 84% of organisations surveyed indicated that they plan to give base pay increases this year. The average increase isn’t expected to change much from 2017, with 73% of employers estimating an average of 3% or less.

The highest base pay increase given to an employee (excluding promotions) was greater than 10% for 40% of organisations, with 13% of organisations giving an increase that was 20% or higher.

About 71% of organisations offer some form of variable pay like bonuses or commissions.

According to PayScale, a one-size-fits-all approach to allocating increases doesn’t tend to be very motivating to employees, especially to high-performing employees.

In general, it seems that more organisations are relying on variable compensation to drive the types of behaviours they want to see among their employees.

Top-performing organisations tend to consider pay to be an ongoing dialogue with employees, not an annual event that comes and goes.

Perception

The perception about a company's commitment - or lack of commitment - to fair payment of employees is a top priority for Millennials (roughly those between 20- and 37 years old) as well as Baby Boomers (those between 54 and 73), the report found.

"Talent is watching and making value judgments on how organisations craft their pay philosophy and practices. If those don’t align with the culture or sit well with employees, they may take their skills elsewhere," says Tim Low, senior vice president of PayScale.

The company collects data from organisations globally on how they pay and how they manage the business of compensation.

Low quotes Larry Fink, CEO of international asset management firm Blackrock, as having said in an open letter to business leaders that "many individuals around the world are facing low rates, low wage growth and inadequate retirement systems". Fink challenged companies to "do the right thing".

"We believe that organisations that make choices to balance the interests of shareholders and employees, and communicate these clearly, will win the perception game that has put talent in a stronger position than it has been in for quite some time," Low says in the report.

"Compensation, done well, is about your organisation’s realisation that you are playing a talent game and a perception game, and to win you must approach what you pay, how you pay and why you pay as key pillars of your talent strategy."

In Low's view, retaining top talent is just as important as attracting new talent for a company.

"You need to show your existing and future employees that you care about them, their lives and their quality of life. Acknowledge the value they bring to your organisation’s success," he says.

The report found that 59% of respondent companies globally are very concerned about employee retention.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.94
-0.0%
Rand - Pound
23.91
-0.0%
Rand - Euro
20.42
+0.1%
Rand - Aus dollar
12.33
+0.1%
Rand - Yen
0.13
-0.0%
Platinum
908.05
+1.2%
Palladium
1,014.94
0.0%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders