African Expatriate Salaries Continue to Fall

Special to the Northern Miner by Lachlan Spicer, Globe 24-7 CEO

EXPATRIATE salary benchmarks in Africa continue to trend downward with a further 10% drop in base salaries over the past 12 months, according to African-specialist HR consultancy firm Globe 24-7.

Globe 24-7’s bi-annual African Remuneration and Benefits Benchmarking Report gathers expatriate remuneration, benefits and employment conditions data from over 25 ASX, TSX, JSE and AIM-listed African mining companies.

Globe’s CEO Lachlan Spicer said that the report released on June 1st provided valuable insights into the current employment market for expatriates working in Africa.

“Companies have put the magnifying glass over many areas of their business over the past 12 – 18 months and expatriate salaries are no exception. This is evidenced in a sharp reduction by 10% in the past 12 months for all new hires.”

Spicer adds that the most significant salary reductions are in the lower-level expatriate positions as companies choose to source labour from cheaper talent pools or replace expatriates with local national workers.

“58% of our data comes from expatriate Africans working within Africa. This shows that there is a growing confidence in the technical and operational competence of African mining professionals and coupled with lower travel costs, we expect this figure to continue to rise”.

Spicer believes that salary levels will continue to be carefully monitored through 2015 and 2016 as cost management remains order of the day.

“There was a general sentiment at the PDAC conference in Toronto earlier this year that 2015 would see improvement for expatriates working in African mining companies. The latest findings however indicate that over half of the expatriates didn’t receive a pay rise at all during the first half of the year, and of those that did, the average was just over 3%”.

Whilst there are pressures on mining operations to reduce payroll costs, short-term incentives like production bonus’s are back on the table after a lean couple of years.

“Three quarters of expatriates were paid out some form of short-term incentive in this past 12 month period and whilst they may not have paid the ‘full’ amount they had targeted, there have been some return to workers which is good news. We saw companies realigning their KPI’s during 2013 and 2014 which is now paying dividends”.

The benchmarking report provides insights into rosters, travel and other benefits and Spicer states how important it is to view compensation in its entirety.

“Companies may not be increasing base salaries at the moment, but they may be offering other incentives such as share plans, more family-friendly rosters, improved insurance policies or even additional training opportunities”.

Spicer said the report had proven useful for companies to help them make informed decisions on their remuneration practices stating “a CEO or CFO wants to know what the benchmark salary is when deciding to employ a West African or a Canadian or an Australian to their operation as all other employee ‘on-costs’ fall from that very first decision. This quantitative data helps them develop a robust salary structure in light of the current market conditions in Africa”.

The next report will be released on November 30, 2015.

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