Thirty-two percent of companies in the RemChannel and Old Mutual Corporate Salary and Wage bi-annual survey said their budgeted wage and salary increases would be affected due to the impact of the third wave of the Covid-19 pandemic and the recent civil unrest. File photo.
Thirty-two percent of companies in the RemChannel and Old Mutual Corporate Salary and Wage bi-annual survey said their budgeted wage and salary increases would be affected due to the impact of the third wave of the Covid-19 pandemic and the recent civil unrest. File photo.

Many salaries and wages to be affected by recent unrest and third Covid wave

By Edward West Time of article published Jul 30, 2021

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Thirty-two percent of companies in the RemChannel and Old Mutual Corporate Salary and Wage bi-annual survey said their budgeted wage and salary increases would be affected due to the impact of the third wave of the Covid-19 pandemic and the recent civil unrest.

Data from RemChannel, a firm that has been doing remuneration and other benchmarking and numerical research for 20 years, released during a webinar yesterday showed that of the 32 percent, 80 percent indicated they would reduce budgeted remuneration increases, 5 percent said they would cancel the increases, while 15 percent said the increases would be postponed.

RemChannel managing director Rene Richter said their interactions with companies had indicated that these decisions were being based on assessments of the future sustainability of the business, risks and to prevent further job losses in an environment where business margins were under pressure.

The survey, which reflected data from mainly bigger companies in the country, showed that the industries most affected were the construction, retail, fast-moving consumer goods and manufacturing sectors.

Conversely, 68 percent of companies surveyed indicated that the third wave and recent civil unrest in KwaZulu-Natal and Gauteng would not impacted their budgeted remuneration increases.

She said employers continued to view the retention of top skills as a priority in their remuneration strategies, something that had not changed since the onset of the pandemic, due to the shortages of skills, and the fact that resignations remained, by a wide margin, the primary reason for people leaving their jobs.

Richter said there had, however, been an uplift in business confidence regardless of the third wave and unrest, as evidenced by the significant number of employers in the survey who were not needing to withhold remuneration increases to save costs in the year to April 2021, compared with the same period last year.

Average annual wage and salary increases budgeted for unionised employees for the next 12 months was 4.9 percent, 4.6 percent for generalised staff, 4.4 percent for management and 4.2 percent for executive level.

Old Mutual Corporate Director of Large Enterprises Malusi Ndlovu said some 48.5 percent of employers - 25 percent of Old Mutual Corporate’s clients - had taken a payment holiday on retirement funding for their staff through the pandemic last year, but 90 percent had resumed paying the benefits by the end of the first quarter of 2021.

Ndlovu said their interactions with businesses showed that the most immediate concern among employers was for the safety and security of their staff and stakeholders, and the impact of disruptions on supply chains.

He said the “background” concern, however, was whether the civil unrest was a once-off event, or whether there would be “slow burn” of this type of violence over the longer term, which would have a debilitating effect on the operations of many businesses and also affect business confidence.

On the future role of trade unions, Ndlovu said there was big scope for unions to play a role with employers on measures to build business resilience, and in the creation of shared values by giving more people a greater stake in the business.

Meanwhile, according to the BankservAfrica Take-home Pay Index released yesterday take-home pay in South Africa’s formal sector declined by less than a percentage point year-on-year in June.

“The real salary for June 2021 was R12 496, or R14 883 in nominal terms,” said Shergeran Naidoo, BankservAfrica’s head of stakeholder engagements.

Mike Schüssler, a chief economist at economists.co.za, “Up until this point, the recovery in the monthly take-home pay has been stronger than one could have expected. But, the total salary payments are not yet back at the levels seen two, three or even four years ago. The decline in total take-home pay paid to all the employees shows the Covid-19 pandemic still influences the number of people employed in the formal sector and the total real amount paid.”

The total take-home pay for all employees in the system increased by 11 percent year-on-year. This reflected recovery at its best. But the very fact that South Africa had not yet recorded better numbers than in 2019, 2018 or 2017 indicates that salaries had not yet fully recovered,

“When we look at salaries in a ‘normal year’ by comparing it to figures two years ago and before the pandemic hit, the total money paid to all the employees into the National Payment System for 2021 was still about 3 percent lower than in 2019,” said Naidoo.

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