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Companies rule out salary increments

MOST companies will not increase their workers’ salaries next year with only half prepared to pay a bonus this year, a survey has revealed.

By Kudzai Kuwaza

In a survey by Industrial Psychology Consultants (IPC) titled 2017 Annual Bonus Likelihood Survey Report, it was found that 55% of organisations which participated in the survey will not increase employees’ salaries in 2018.

The survey also found that 50% of the participating organisations will pay bonuses in 2017 and 22% of the participating organisations will not pay bonuses and the remaining 28% are uncertain as to whether or not they will pay a bonus.

Of the companies that participated in the survey, 18% have retrenched workers in 2017.

The companies which are not paying a bonus cited various reasons which include adverse company performance, financial constraints, failure to achieve targets, the ballooning of operational costs and a decrease in sales.

Most of the participants (68%) who are forecasting to pay bonuses this year, the survey established, said that the bonus will be a guaranteed cheque.

“This suggests that, overall, bonuses this year will be paid not because the company has performed, rather because the bonus is contractual (guaranteed),”the IPC observes in its survey.

A relatively large percent of the participants (37%), whose bonus is not performance related have retrenched employees this year as compared to the other participants who factor in performance, the survey revealed.

In 2017, the survey established, most of the participants (44%) said they consider both company and individual performance in bonus payments. Of the participants that pay the 13th cheque, 16% said they pay bonus factoring the company performance while 38% of the participants said there is no particular link to performance in bonus payments. Only 2% said they consider other factors in paying a bonus.

The participants were drawn from various sectors of the economy which include tourism and hospitality, construction and real estate, information technology and telecommunications, mining and engineering.

“The current bonus system, where companies pay bonuses because they are contractual or through NEC Collective Bargaining Agreements, is likely to continue to put more pressure on companies to reduce costs, as the majority of them are already highly leveraged,” IPC warned in its survey. “Bonuses, especially those with no relationship to performance are a luxury in the current environment. Companies who are continuing this practice are putting themselves in real danger. Employers and employees need to have candid discussions around this issue.”

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