The landscape of pay in South Africa is evolving, demanding a balance between competitive strategies and ethical practices.
By Craig Raath, master reward specialist (SARA) and executive director at 21st Century
As we move into 2025, we’ve noticed that remuneration discussions with clients are increasingly focused on variable pay, equitable wage structures, and new regulatory mandates are shaping the narrative.
This year, pay trends are aligning closely with sustainable business practices, fairness, purpose-driven retention, and adaptability in an increasingly global job market. Here are some of the prominent trends observed through our engagements.
Variable Pay: There is a clear shift towards purpose-driven incentives. In conversations with clients, it’s evident that variable pay, including short- and long-term incentives, remains vital for motivating performance. Importantly, we’re seeing a greater focus on linking these rewards to environmental, social, and governance (ESG) goals. This approach not only bolsters accountability but also seamlessly integrates corporate and societal objectives, reinforcing the company’s broader purpose of aligning profit with meaningful, positive impact.
Narrowing Wage Gaps: The regulatory emphasis, marked by Section 30A of the Companies Amendment Bill, mandates transparent disclosure of wage gaps—highlighting the ratio between top earners and the broader workforce. Aligning with King IV’s principles, we’ve found that organisations are treating wage gap analysis not just as a compliance check but as a moral and purpose-driven commitment to equity. High-profile cases have underscored the importance of bridging these gaps to maintain workforce trust and public credibility.
Customised Rewards: We’re increasingly hearing from organisations about the challenge of meeting diverse employee needs through personalised reward offerings. Organisations are shifting from static reward structures to more adaptable benefits that resonate with different life stages and career aspirations. This emphasis on tailored solutions is rooted in the purpose of creating a work environment where all employees feel valued and supported.
Hybrid Work Policies Under Scrutiny: The initial enthusiasm for hybrid work models has tapered off, as noted in many of our client discussions. While flexibility remains a highly valued part of an Employee Value Proposition (EVP), implementing it effectively has proven complex. Organisations are now grappling with tailoring flexibility to balance productivity, team cohesion, shared learning and fairness, with a purposeful approach to meet employee needs while sustaining the company’s values and performance expectations.
Leveraging Technology: Advanced HR analytics have become essential for modern reward systems, as we’ve observed in client engagements. With real-time performance tracking and robust people analytics, HR teams can better interpret data, predict trends, and refine strategies that align with both performance and purpose. This analytical capability enhances HR’s strategic role, allowing it to actively support a purpose-aligned workforce that thrives on transparency and trust.
As we look ahead to 2025, the message from our client conversations is clear – South African organisations must continuously adapt their pay strategies to be competitive, fair, and purpose-driven. Embracing flexible, transparent, and performance-focused remuneration practices underpinned by a clear sense of purpose will not only secure employee loyalty but also strengthen companies as ethically driven and strategically agile market leaders.