Declining interest rates and higher pay packages for South African employees are resulting in more disposable income for consumers, which, in turn, is boosting the economy. But against this landscape, how are our highest earners coping with the choppy seas of leading a JSE-listed company, and what advice from PwC can help them draw the long straw?
It’s been hard to miss the current good trajectory in the news related to salaries in South Africa. The average take-home pay of an estimated four million employees, as tracked by BankservAfrica’s latest Take-home Pay Index (BTPI), made a happy 11,9% leap from R 15 367 in December 2023 to R 17 202 in December 2024.
This upwards graph has clearly had a number of positive drivers, such as the suspension of load shedding, the ongoing recovery of business, inflation seeing moderation, and two interest rate cuts, making 2024 the most robust salary year in the country since 2020.
As a result of this occurrence, South Africa’s retail marketing and sales job sector has also reflected decent growth, including in the purchasing rate of passenger vehicles. In effect, salary earners have stronger purchasing power now, because more take-home pay and lower consumer inflation (down from 5,3% in January 2024, to 3% in December 2024) means more disposable income, or “fun money”. This directly indicates good news to business owners.
The result is that 2025 looks set to experience a significant gross domestic product (GDP) increase, of approximately 1,7%, due to improved household expenditure, more investment from consumers, and any policies that are applied to further boost the economy – such as more reliable power-generation capacity, better supply-chain systems on the rails and at the ports, and upgraded water infrastructure (particularly in the Gauteng province).
Consumers are also enjoying the benefits of an additional interest-rate cut, of 25 basis points, as of the end of January 2025. While predictions are that the average salary increase could reach 5,7% by the end of 2025 (up from 4,5 in 2023, according to the latest quarterly bulletin of the South African Reserve Bank), it all depends on a particular employer’s “financial health”, “employee performance”, and “talent-retention goals”.
How the Other Side Lives
Peeping over the fence into the pay packages of JSE-listed company CEOs, reveals average earnings of approximately R 250 940 per day and total annual earnings of between R 22,5 and R 300 million across the nine sectors of technology, mining, banking, retail, insurance, hospitality, diversified (i.e. operates across multiple distinct business lines or industries), property, and education.
These pay packages exceed those listed in the PwC 2024 Directors’ Remuneration and Trends Report – i.e. a median total guaranteed pay packet for CEOs of the top 200 JSE-listed companies at R8 million per annum; and a median total remuneration package of R 19,71 million annually, when short- and long-term incentives are applied to the mix.
However, it is important to note that these extremely high salary earners face equally high-level challenges: “economic constraints”, “political instability”, “high levels of inequality” (within their workforces), “fluctuating exchange rates”, “skill shortages” (particularly in STEM-related jobs), and “unreliable infrastructure” (particularly freight and port-related, as mentioned above).
Although the financial rewards are vast, these corporate leaders must keep the work of their institutions competitive in comparison to their peers, while also operating in a regulated and compliant manner in the face of ongoing digital transformation.
The PwC report advises that “organisations will face more of the same scrutiny, as well as new demands” in the year ahead. This scrutiny extends to:
- an increased focus on fair pay and the reason for wage gaps within tight budgets; and
- enhanced pay disclosure by companies to satisfy both regulatory and shareholder requirements.
Remuneration policy will be subjected to an ordinary shareholder vote every three years, and each company’s interim report will need at least an annual ordinary shareholder vote. The reason for any wage gaps (i.e. gender-related, or between the highest- and lowest-paid employees) will also require disclosure.
Advice then, for CEOs running JSE-listed firms, is to meet up with your CFO and discuss:
- Whether there is a need to review your current remuneration framework and policy;
- whether the current structure is suitable as far as attracting and retaining key talent is concerned;
- The importance of engaging with shareholders early, to disclose the rationale for changes to the remuneration policy (if any);
- The value of gaining shareholder input on ways to adopt ESG measures in incentive plans, without succumbing to diminished returns;
- The need to potentially include an emergency discretion clause in your remuneration policy, to allow for genuinely unforeseen and/or exceptional circumstances; and
- The need to focus on areas that investors and shareholders identify as important, as far as these relate to performance, together with fair and responsible pay.
The reality is that negative stakeholder perceptions of excessive executive pay packages, and/or non-traditional incentive plans, will persist, especially in the case of a lack of adequate underlying company performance.
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