Sub-Saharan Africa PMI surveys show cost-of-living payments driving staff costs higher

Recent years have seen cost-of-living wage increases paid to workers at companies in sub-Saharan Africa emerge as a key driver of rises in overall staff costs, rather than the hiring of additional employees. This is shown by analysing comments from PMI survey respondents, with mentions of higher living costs tracking the gap between the staff costs and employment PMI datasets. The ability to see why changes occur highlights the importance of using the PMI survey comments alongside the data to get a full picture of economic conditions.

While there have been some recent signs that the trend of higher wages linked to living costs has been easing off, the outbreak of war in the Middle East and potential impact on energy costs in particular has the potential to reverse the recent disinflationary picture.

Staff costs rise more quickly than employment levels post-COVID

From 2022 onwards, an unusually large gap has opened up between the staff costs and employment indices in the sub-Saharan Africa PMI aggregate data, calculated by weighting together the seven PMI surveys conducted by S&P Global in Sub-Saharan Africa (Ghana, Kenya, Mozambique, Nigeria, South Africa, Uganda, Zambia). The divergence was particularly large in 2023 and 2024 when staff costs increased solidly at a time of only modest employment growth.

This differed from the trend seen up until the COVID-19 pandemic, when the two PMI series generally tracked closely to one another, suggesting that during this period any increases in staff costs were more closely linked to the hiring of additional workers.

Cost-of-living payments drive wage rises

Comments from the PMI survey respondents can help us to understand what drives changes we see in the data. From 2022 onwards, companies often reported helping their workers to cope with marked increases in their costs of energy, food and transportation by making extra cost-of-living payments. Comments such as "increased the salary because of the high cost of living" have appeared regularly in the anecdotal evidence we receive from respondents.

In fact, if we amalgamate all of the reasons that mention these payments across the region, we see that the monthly trend matches up very closely with the aforementioned gap between the PMI staff costs and employment series. This suggests that cost-of-living payments have been a key driver of rising staff costs in recent years at a time when the hiring of additional staff has been muted.

In 2025, the gap between the two PMI series narrowed to a four-year low amid softening inflationary pressures across the region, lessening the need for cost-of-living payments. Firms' input costs rose at the slowest pace in over five-and-a-half years in February, while selling price inflation eased to the weakest since May 2020.

Inflation picture more uncertain following outbreak of war in Middle East

The recent disinflationary trends seen in official data on consumer prices and the PMI survey data, as well as subsequent reductions in interest rates across a number of economies, may be reversed in the months ahead depending on the length and severity of the war in the Middle East and any associated impact on oil and gas supply. PMI data and the comments from panel members will help to illustrate any impacts on firms in sub-Saharan Africa with the release of March data in early-April.

Andrew Harker
Economics Director, S&P Global Market Intelligence
andrew.harker@spglobal.com

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Purchasing Managers' Index™ (PMI^®) data are compiled by S&P Global for more than 40 economies worldwide. The monthly data are derived from surveys of senior executives at private sector companies, and are available only via subscription. The PMI dataset features a headline number, which indicates the overall health of an economy, and sub-indices, which provide insights into other key economic drivers such as GDP, inflation, exports, capacity utilization, employment and inventories. The PMI data are used by financial and corporate professionals to better understand where economies and markets are headed, and to uncover opportunities.

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This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.