Understanding the context of wage negotiations and salary increases
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Expectations for wage negotiations
Labour experts caution against overly optimistic expectations for the 2024 wage negotiations, set to be challenging amid economic difficulties including high inflation, a struggling trading environment and job losses. Workers, burdened by the escalating cost of living and debt, are pinning hopes on wage talks for relief.?
Amid a Consumer Price Inflation (CPI) rate of ±5%, unions are pushing for wage adjustments of around 7%, while employers are likely to settle closer to 5-6%. Experts stress the need for honesty and transparency in negotiations, urging employers to consider modest wage increases above CPI to alleviate financial pressure on workers[1].
Economists warn against unrealistic demands that could lead to strikes, intensifying hardships for both workers and employers. Concerns also loom over companies facing retrenchments or financial distress.
Rights in relation to salary increases
Annual salary increases are not a right and are not guaranteed by employers in South Africa, regardless of any previous salary increases or expectations created. To secure salary increases, an employee must negotiate with an employer before the start of their employment relationship and have the agreement included in their employment contract, making it legally binding.
Some employers choose to increase employees’ salaries unilaterally. By law, an employer cannot legally amend an employment contract without the consent of all parties involved; any proposed changes must be negotiated and agreed upon by both the employer and the employee. ?However, if an employer decides to pay an employee more than the agreed amount, it is generally in the employee's best interest to accept the increase.
In the past decade, there has been a noticeable trend among employers to implement varying salary increases. This means that different employees may receive different percentage increases based on various criteria. It is within the employer's discretion to determine who receives which salary increase. However, these distinctions must be based on performance or similar factors and must not involve unfair discrimination.
Employers are obligated to act fairly in all labour practices, a mandate reinforced by South African labour law and the Employment Equity Act. This legislation prohibits unfair discrimination on various grounds, including race, religion, sexual orientation and gender. Employers must ensure that any decisions regarding salary increases are justifiable, reflecting a commitment to fairness and equality in the workplace.
This approach to salary increases is not only a legal obligation, but is also conducive to maintaining a motivated and satisfied workforce. Employees who feel that they are treated fairly and compensated adequately, are likely to be more productive and loyal to the company. Therefore, employers must carefully consider the criteria used for determining salary increases, ensuring they are aligned with both legal requirements and best practices[2].
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Negotiating a salary increase?
When negotiating a salary increase, a balance between optimism and realism is required. While economic realities may limit significant adjustments, there's still room to find a solution that satisfies both the employee and the employer.? Here are some tips when you negotiate a salary increase with your employer:?
By combining preparation through research with an open mind, you can enter negotiations with confidence. If a raise is not feasible, discuss alternative forms of compensation, like bonusses or professional development opportunities.
Article written by Etienne Rossouw