Salary increase season - what’s realistic and what’s not in 2025

For many South Africans that are formally employed in both the government and private sectors, mid-year marks a pivotal time for mid-year salary reviews and potential raises.

It is a time brimming with anticipation and hope, as employees look forward to some financial relief for their hard work and dedication.

However, the economic landscape is a complex and ever-shifting terrain.

“Whilst the inflation outlook has improved over the last few months with CPI averaging 3.0% as at April 2025, there’s a lot happening both locally and globally that impacts employers’ ability to meet everyone’s salary increase expectations,” Lindiwe Sebesho, Master Reward Specialist and Executive Committee Member at the South African Reward Association (SARA) said.

She advised that employees manage their expectations by understanding the economic factors at play.

This understanding can lead to more constructive and better-informed salary conversations, ultimately fostering a healthier employer-employee relations environment focused on driving much needed productivity for the country.

Know the factors at play

Employers' ability to increase salaries is influenced by several factors, including national and global economic growth prospects, company performance and affordability, as well as skills market trends.

Inflation is expected to remain moderate and within the South African Reserve Bank’s 3-6% target range through 2025/26.

However, even with recent cuts, interest rates remain high, making debt expensive for individuals and organisations alike, and leaving both employees and employers under financial strain.

While we dodged the VAT bullet, the increase to the fuel levy will still hit everyone hard, from individual motorists to company and public service fleets.

This cost might be offset by expectations of lower fuel prices but will still have an adverse impact on expenses. Additionally, rising food costs due to droughts and other climatic factors will put further pressure on budgets.

Employers will also be hampered by weaker GDP growth than previously predicted, as well as global economic instability fuelled by US President Trump’s on-again-off-again tariffs.

Tariffs on South Africa’s trading partners could create unwelcome local inflation, making organisations wary of committing to higher labour costs.

"Considering the present economic circumstances, a balanced approach to salary adjustments is required. The intention is not to undervalue employees but to explore comprehensive strategies for improving the overall employee value proposition in a manner that ensures business sustainability and job security," Sebesho added.

Given these facts, you may need more information to optimise your remuneration package beyond just a salary increase.

Take a positive approach

Despite economic pressures, you can improve your odds by taking some simple steps, such as:

• Know your job’s worth - There are many sources of salary information so you can decide if you are being paid fairly, but make sure you use authoritative information from recognised experts, along with considering remuneration policy information from your employer.
• Be understanding - If you do your homework and understand your employer’s constraints, you can approach your salary increase conversation more rationally and constructively, which could help you win a more positive outcome that also helps you retain your job in the long term.
• Show your value - Salary increases are typically based on performance, so now is the time to demonstrate how well you have done personally and your contribution to the organisation’s goals – this might help you get a bit more than you expected.
• See the big picture - Remuneration isn’t just about money but includes benefits and other rewards as well, so review your entire remuneration package and ask about non-monetary or money-saving benefits, including how you can flex your retirement benefits to help offset any immediate financial shortfall without compromising your long-term savings goals.

Keep it real and respectful

While you may be desperate for, expecting or even demanding an above-inflation increase, it is important to be realistic and, especially, respectful during a salary increase conversation.

Employers are also strapped due to economic conditions and understanding their limitations without over-comprising yourself will be appreciated.

Sebesho said, "It is essential to expect fair and equitable pay that allows you to participate effectively in the economy. However, understanding both perspectives is crucial for balanced salary adjustment negotiations that ultimately safeguard employment."

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