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90% of employers to raise salaries this year, Hays finds

More employees will receive a pay rise this year than last, but it will be a less significant increase than they hoped for. That’s according to the FY 2019/20 Hays Salary Guide, released today and based on a survey of more than 3,400 organisations representing over 4.7m employees. The survey found that 90% of employers will increase salaries in their next review, up from 87% who did so in their last review.

However, the value of these increases will fall. Almost two-thirds (65%) intend to raise salaries at the lower level of 3% or less, up from 57% who did so in their last review. At the other end of the scale, just 4% of employers, down from 9%, intend to grant pay increases of more than 6%.

The number of employers who will increase salaries at the mid-level, between 3 and 6%, remains unchanged at 21%.

Not all Australians will receive equal salary rewards either. Advertising and media tops the list of most generous industries, with 15% of employers planning to award salary increases of 6% or more in their next review. This is followed by IT & telecommunications (11%), construction, property & engineering (7%) and professional services (6%).

For their part, 27% of the more than 1,600 professionals Hays also spoke to expect no increase whatsoever and a further 41% expect 3% or less. Yet while these professionals anticipate little or no increase, they’re not going to sit idly by and accept it.

In fact, more than half (57%) say a salary increase is their number one career priority this year. 46% intend to achieve this by asking for a pay rise, while others are looking elsewhere – 41% of jobseekers say their uncompetitive salary provoked their job search.

Nick Deligiannis, managing director of Hays in Australia & New Zealand, said,  “Evidently, the aggregate effect of several years of sedate salary increases is taking its toll and we’re now seeing a tug of war over salaries.

“On the one hand, we have professionals telling us they’ve prioritised a pay rise and are prepared to enter the job market to improve their earnings. On the other, employers tell us they want to add to their headcount and are being impacted by skill shortages, yet they plan to curtail salary increases.

“The resulting salary friction will lead to rising turnover. Already, one third (33%) of employers say turnover increased during the last 12 months, while 40% of professionals are either currently looking or planning to look for a new job in the next 12 months.

“These professionals are responding to low wage growth by seeking external opportunities as a means to achieve the step-change rise they’re looking for.”

In other key findings, the 2019/20 Hays Salary Guide found:

  • Flexible work practices are the most common non-financial benefit offered – by 83% of employers – ahead of ongoing learning & development (offered by 70%) and career progression opportunities (62%);
  • 67% of organisations offer flexible salary packaging. Of these, the most common benefit is salary sacrifice, offered by 55% of employers to all employees. This is followed by above mandatory superannuation (offered by 37% of employers to all their employees), parking (33%), bonuses (27%) and private health insurance (26%);
  • Of the benefits offered to a select few employees, private expenses tops the list, with 70% of employers offering it to a hand-picked number of employees;
  • 68% of employers said business activity had increased over the past year, with 70% expecting it to increase in the next 12 months;
  • 47% intend to increase permanent staff levels over the coming year;
  • 70% say skill shortages will impact the effective operation of their business or department in either a significant (28%) or minor (42%) way, up from 67% last year;
  • 54% of employers are restructuring to keep up with changing business needs – the key driver of these restructures is a change in the required skill sets;
  • In skill short areas, 57% of employers would consider employing or sponsoring a qualified overseas candidate.

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