Lindiwe Sebesho, MD of Remchannel & Thiru Govender, Principal Consultant at Old Mutual Corporate Consultants

Employers are continuing to fund salary increases above inflation, but new data suggests pay alone is not giving employees the financial buffer they need.

The latest April 2026 Remchannel Bi-Annual Salary and Wage Movements Survey shows average salary increases of 5.43%. Yet when read alongside the latest Remchannel Employee Benefits Guide (December 2025) and Old Mutual Corporate’s Two-Pot withdrawal data, a more complex picture emerges: employees remain under financial pressure, while some forms of workplace support are becoming more selective. This move comes as employers struggle to balance rising costs with the necessity of staying competitive.

“What this research points to is a trade-off in how employers are rewarding and supporting their people,” says Lindiwe Sebesho, MD of Remchannel. “Companies are still funding increases, but higher pay on its own is not always enough to offset the financial pressure employees are facing.

“The real question is whether employers are cost-effectively structuring remuneration, benefits and other forms of support in a way that is aligned to what employees value most and where pressure is being felt most acutely.”

The Remchannel Employee Benefits Guide points to a more selective approach, with employers scaling back traditional support such as soft loans, cash advances, fully paid maternity leave and formal sign-on bonuses in favour of more flexible and targeted forms of support. “What emerges is not just a shift in spend, but a shift towards more performance oriented reward design,” says Sebesho.

Employee behaviour confirms the strain

That tension is also evident in continued withdrawals from retirement savings under the two-pot system, even though employers are still providing real growth from a salary increase perspective.

Old Mutual Corporate’s latest Two-Pot withdrawal survey shows that March 2026 claims returned to near inception-level volumes, with about 100,000 claims recorded by month-end. “What matters for employers is not just that people are withdrawing, but why,” says Thiru Govender, Principal Consultant at Old Mutual Corporate Consultants.

Among lower-income members, basic living needs alone accounted for 45% of withdrawals, while across all income bands the leading reasons were essentials, emergencies and debt. Among members who withdrew, women were slightly more likely to cite basic living needs as their reason, at 35% compared with 33% for men. Men were somewhat more likely to cite debt repayment, at 28% compared with 24% for women.

“That pattern shows how deeply financial pressure is embedded in employees’ day-to-day lives,” says Govender. “For employers, the question is whether pay, benefits and wider support are aligned to where employees are feeling the most strain. Two-pot withdrawal data gives employers a valuable signal of where current support may be falling short.”

Yet Govender says the withdrawal pressure should not obscure the fact that the two-pot system is working as intended, with preservation already up by 33% and more money staying invested for retirement when members change jobs.

“The system was designed to balance short-term access with long-term preservation,” she says. “While members are using the savings pot to manage real financial pressure, mandatory preservation is helping to protect retirement outcomes. At a system level, Old Mutual Corporate’s research suggests this improved preservation could increase retirement savings by two to three times over a working lifetime.”

A more integrated reward strategy

Data from Remchannel and Old Mutual Corporate suggests the employer challenge has shifted from the amount of spend to the alignment of support.

“Salary increases remain important, but if support is being reduced in areas where employees are under the most pressure, employers may need to rethink how different elements of reward work together to deliver real value to the people they aim to attract, motivate and retain,” says Sebesho. “In a cost-conscious environment, disconnected reward decisions fail to improve well-being or retention.”

She argues that a total reward strategy can deliver holistic support without increasing costs by focusing on what employees’ value most. High-impact support often requires no additional or direct financial outlay.

“Flexible working arrangements like remote work or staggered hours, help employees save on commuting costs while improving work-life balance. Giving people more control over their schedules is often as valued as a pay rise for employees who have to consider the cost of travel and the time it takes,” Sebesho notes. Similarly, financial education and mental health resources can be delivered at minimal cost by leveraging existing digital platforms or wellness partnerships.

However, a risk exists in pulling only the most visible lever: cash. Sebesho warns that if other benefits are reduced while pay is increased, employees may still feel a net loss. “If valued benefits are replaced with higher cash, that extra cash may not ensure financial wellbeing, since employees might end up spending more to cover those benefits themselves,” she says.

Ultimately, prioritising guided flexibility within a competitive package ensures every element of reward works harder. As Sebesho puts it: “It’s about optimising the total remuneration package for both the business and its people, especially when cost pressures are high and sustainable performance is key.”

Other 2026 Remchannel Salary and Wage findings:

• Labour turnover (excluding temporary workers) rose to 17.8%, up from 13.5% a year earlier, while resignations accounted for 31% of exits.
• More than 70% of companies now implement a Total Guaranteed Package (TGP) model for senior management, whereas unionised staff primarily retain a basic salary plus benefits based model.
• Although 64.3% of respondents report differentiating pay for high performance, a significant concern remains, as only 22% of organisations noted that formal performance reviews actually occur.
• Efforts towards pay transparency are improving, with 85.7% of organisations now conducting annual fair pay analyses compared to 77.3% in late 2025.

“Employers cannot solve financial pressure through salary increases alone,” concludes Sebesho. “The bigger opportunity is to build a more integrated approach to reward, where pay, benefits, incentives and wider support work together to reflect employee needs, support financial wellbeing and strengthen the overall employee value proposition.”

ENDS