Commentary: African expatriate salaries continue to fall

Expatriate salary benchmarks in Africa are trending downward with a 10% drop in base salaries over the past year, according to research by our firm Globe 24-7, an African-specialist human resources consultancy.

Our biannual African Remuneration and Benefits Benchmarking Report gathers expatriate remuneration, benefits and employment conditions data from over 25 African mining companies listed on the Australian Securities Exchange, the Toronto Stock Exchange, the Johannesburg Stock Exchange and London’s AIM.

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 the sharp 10% reduction in the past 12 months for all new hires.

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

Expatriate Africans working within Africa account for 58% of our data. This shows there is growing confidence in the technical and operational competence of African mining professionals and, coupled with lower travel costs, we expect this figure to rise.

We also believe that salary levels will be carefully monitored through 2015 and 2016, as cost management remains the order of the day.

There was a sentiment at the Prospectors & Developers Association of Canada convention in Toronto last March that 2015 would see improvement for expatriates working in African mining companies.

Our latest findings, however, indicate that over half of the expatriates didn’t receive a pay raise at all during the first half of the year, and of those that did, the average was just over 3%.

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

Three quarters of expatriates were paid some form of short-term incentive in this past 12-month period, and while they may not have been paid the “full” amount they had targeted, there have been some returns to workers, which is good news. We saw companies realigning their key performance indicators during 2013–14, which is now paying dividends.

We also track rosters, travel and other benefits, as it’s important to view compensation in its entirety. Companies may not be increasing base salaries at the moment, but they offer other incentives, such as share plans, more family friendly rosters, improved insurance policies or even training opportunities.

— Lachlan Spicer is CEO of Globe 24-7, an international human resources consulting and search firm that partners with mining, power, manufacturing and oil and gas companies around the world from its global offices. Please visit globe24-7.com.au for more information.