The annual report provides an insight into the views and expectations of more than 12‚500 businesses a year across 44 economies‚ and surveys both listed and privately held businesses. Around 600 business leaders are surveyed on an annual basis for the report.
The data for this year's report were drawn from interviews with 3‚450 chief executive officers‚ managing directors‚ chairmen or other senior executives from all industry sectors. It was conducted in November and December last year.
Grant Thornton SA said that while it was good news for South African workers that they should expect higher pay rises than workers worldwide‚ it was questionable whether this situation was sustainable given current global economic conditions.
Growth in the South African economy slowed to 2.5% last year from 3.5% in 2011. Growth this year is expected to improve slightly but is expected to remain below 3%.
A surprising 68% of the 600 business leaders surveyed said they would increase salaries in line with inflation‚ while more than a quarter (26%) would increase salaries by more than that over the next year.
The advisory firm said it was important to note that SA's inflation was higher than in other countries and that this should be taken into account when assessing real increases.
Less than 5% of SA businesses will not increase pay.
"While pay rises are certainly a necessity to help eradicate poverty concerns‚ unrealistic wage hikes will only bring added pressure to an ailing economy‚" Grant Thornton Cape managing partner Ian Scott said.
By contrast with SA's high wage increase expectations‚ a total of 18% of Bric (Brazil‚ Russia‚ India‚ China) businesses and 21% of global businesses did not plan to offer any pay rises in the next 12 months.
Only 15% of Bric and 14% of global businesses will offer increases higher than inflation in the year ahead‚ while about half the businesses in each of these geographical areas will offer increases in line with inflation.
"SA's labour unions and collective bargaining councils ensure that employees get salary increases every year‚ which sets the tone for the private sector‚" said Scott.
"But‚ continuing to increase salaries every year in a struggling economy places SA firmly in the danger zone for rising inflation over the next 12 months - and this could have a negative impact on this county's growth expectations for the year ahead," he added.
Businesses around the world also reported that the global skills shortage was weighing on growth prospects.
Grant Thornton noted that this was also an issue for SA‚ with a lack of qualifications and work experience worsening the situation.
A staggering 83% of local businesses reported a lack of technical skills when it came to recruitment compared with only 61% of Bric economies and 64% of global businesses reported this challenge.
"When the data is split according to sector‚ we note that SA's mining industry is finding the shortage of technical skills the most challenging‚" Scott said.
The survey revealed that 58% of SA businesses report difficulties in recruiting skilled workers.
Scott said it was imperative for business and government to work more closely to find solutions to SA's employment crisis.
Source: Business Day via I-Net Bridge
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