Remuneration Trends in Southern Africa

PricewaterhouseCoopers’ (PwC’s) first edition of the Remuneration Trends report for Southern Africa reveals that the greatest challenge facing multinational organisations in the war for talent is the lack of credible and reliable data available in Southern Africa.

Gerald Seegers, PwC Director of Human Resource Services – Tax says, “The scarcity of skills has forced countries to compete against each other in a regional and global basis. In this report we highlight the issues currently facing companies in Botswana, Malawi, Mozambique, Namibia, South Africa, Zambia and Zimbabwe in the area of remuneration, basic pay and benefit practices applicable in these countries.”
The three pay comparisons specifically focused on in the report cover the differences in pay by job level for basic salary and total guaranteed package, the pay gap between labour and executive levels as well as salary increases versus CPI inflation.

The largest pay gap currently exists in Malawi, where executives are paid 106.7 times more per month than the lowest paid workers. In South Africa this gap is significantly lower with the average executives in small-cap listed companies being paid 32 times more than labourers. However, Malawi shows the most difference in gradient of salary structure between basic salary and total gross compensation, while Zambia becomes flatter at total gross compensation than at basic salary.

“Our findings on remuneration paid to executives of large-cap listed companies in South Africa show that when the long-term incentives payout values are included in the comparison, the pay gap can reach as high as 300 times. This gap has become a highly contentious issue and was recently commented on by the South African Minister of Finance in his budget vote speech to the National Treasury on 11 May 2010,” continues Seegers.

Decisions made by organisations about how to structure their pay and benefits systems remains a critical component in an organisation’s retention strategy. If well structured, benefits remain a powerful component in a business’s ability to attract, retain and motivate employees. Unfortunately, the value of these benefits are mostly underestimated and inadequately explained to employees.

These issues must be addressed by human resource (HR) departments. HR professionals have many factors to consider when managing compensation systems and making pay decisions. Factors such as performance, competence and retention are important variables to be considered when evaluating employee pay levels.

Seegers concludes “The emerging trend in South Africa is for companies to implement integrated, employee-based solutions, as opposed to taking an isolated and traditional pay-for-the-job approach. Many organisations base increments on productivity which means that performance must be reliably measured against pre-defined targets or goals.”

This article was originally posted on Southern Africa Business Communities