Survey shows that salaries in East Africa set to rise in 2014

Posted on November 8, 2013 04:36 am

A new study shows that salaries across East Africa are set to rise an average 15% next year, with Tanzania and Kenya leading the way in economic bloc of estimated 136 million in terms of increases, according to a survey conducted recently. The study looked at salary increases in various individual industry sectors, including Agriculture, Research and Development, energy, chemical, financial services, print and electronic media, Fast Moving Consumer Goods, technology, pharmaceutical, and a range of job levels within organizations. In United Republic of Tanzania, salaries are expected to increase 15%. Salaries in Kenya are forecast to rise 13% per cent and in Uganda 6%. In Tanzania the inflation rate is projected to rise at an average 2.5% while their northern neighbors Kenya inflation is expected to rise at an average of 4.9% increase. Elsewhere in the East African Community region, salaries in Rwanda and Burundi are set to rise 6% and 5% respectively. The latest findings support last month findings published earlier this year on how companies in East African region are finding it harder to both find and retain suitably skilled staff and how the battle for talent has moved a notch higher.

There are several outcomes expected with one being the fact that more than 50% of the companies surveyed indicated that a larger portion of their salary budget increase allocation will be allocated to high performers in the next twelve months. No single company interviewed anticipates a pay freeze compared to nearly 10% last year according to the study.  Comparing the current and previous studies, the data does indicate a change of tact by companies in the region and looks very different which means the companies are budgeting for salary increases this year more than same time as last year. The study clearly points out that salary increment largely depends on the company’s affordability and availability of resources. Sectors expected to see the highest increment in salaries are Non Governmental Organizations, Financial and banking, Telecom, Broadcast media, Aviation, education and hospitality industries. In Tanzania when a company registers fast rate growth and revenue exceeds the cost such companies are said to increase their staff salaries in order to remain competitive while in Kenya the study shows such companies are aggressive on salary budgets than low-growth companies which employs the majority of Kenyans.

East Africa’s emerging economies, such as Rwanda and Burundi have become the standard bearers for annual pay increases, and statistics shows they have average economic growth rates of 8per cent to 10 per cent respectively. However, the same study shows that they also have one of the strongest inflationary pressures of more than 5% which take up much of pay rises. A human resource expert based in the region told me that salary increases will continue to remain strong in the East African region due to various factors such as an increase in demand for compliance staff to meet with the increased regulations and regional expansions by local brands beyond their domestic markets. For example, the region has witnessed unmatched expansion of Kenyan banks into Uganda, Tanzania, Rwanda, Burundi and South Sudan. The study also showed an increase of salaries throughout East African region as a positive sign, particularly because the increases are in a wide range of industry sectors. The report clearly shows there are challenges for organizations to retain skilled employees and also organizations are taking into account performance based salary and the ability to distinguish pay rate differences. Indeed there are good times ahead for highly skilled employees in the region.

Contador Harrison