In South Africa, more bosses tend to give workers access to their salaries earlier to help them avoid debts!

In response to financial challenges faced by employees, many employers are finding alternative ways to assist as they are unable to afford high wage increases. These measures – such as giving workers early access to their salaries – outlined in the latest Remchannel salary survey, are used as an attempt to alleviate financial strain and empower workers to better manage their finances without resorting to costly debt.

“We’re seeing more employers giving employees early access to their salaries – known as earned wage access – where workers get paid more frequently than once a month to help them manage their finances more effectively”, said Lindiwe Sebesho, managing director of Remchannel.

Soft Loans and Pension Adjustments

Companies are also exploring “soft loans” with favorable terms like lower interest rates and flexible repayment periods. Additionally, employers are allowing employees to opt for lower retirement contribution rates – as little as 6% or as much as 27.5% – providing a higher take-home salary for immediate needs. However, it is extremely important to understand the impact of reduced retirement contributions on future income, especially considering the current retirement scenery.

Lower Salary Increases

In April 2024, South African workers experienced lower average salary increases compared to the previous year. Remchannel’s survey, conducted biannually in April and October, tracks salary movements across various staff categories. The salary movements for April 2024 were as follows:

• Executives saw a decrease in their salary increases, from an average of 5.92% in April 2023 to 5.66% in April 2024;
• Average increases for Management also fell to 5.87% (April 2024) from 5.94% (April 2023);
• General staff increases dropped from 6.13% to 6.04% during the same comparative periods;
• Unionised staff’s  increases dropped from 6.41% last year to 6.16% in April 2024.

“Adjusting salaries is just one part of the equation. The cost of living, especially for necessities like food, electricity, and transport, is accelerating at a rate higher than both inflation and the salary increases we are seeing. This means that the economic challenges that result in high indebtedness will persist, even though salary increases are now more aligned with the core CPI”, said Sebesho.

Factors Influencing Salary Adjustments

From the 55 employers of the government and private sectors, employing more than 400 000 people, who participated in the survey said that they consider factors like inflation (89%), company profitability or affordability (75%), and individual’s performance (69%) when determining salary increases. While some companies use policies combining inflationary increases and performance evaluations, employers for unionized staff say the increases are negotiated, regardless of individual performance.

Embracing Flexibility

42% of survey participants emphasize the importance of mobility and flexibility in enhancing staff productivity. Having a choice of where to work and flexibility are major points employees look for. According to Sebesho, there’s a growing trend towards hybrid work arrangements. As the survey shows, over 80% of employers are adopting hybrid working models, a huge increase from just 41% in 2019.