Aussie bosses are reining in their salary increases this year, meaning countless workers will miss out on a pay rise despite the country’s soaring cost of living crisis.
According to grim new research from recruiter Robert Half, 58 per cent of Australian employers are solely basing remuneration decisions in 2023 on individual and/or company performance instead of as a form of retention.
The data shows bosses are struggling to strike a balance between the current economic uncertainty and the need to keep and attract staff in a tight labour market, and are looking at their remuneration packages as a result.
The research also found that for 20 per cent of employers, remuneration decisions will be purely based on tenure, while 70 per cent plan to offer more benefits this year.
It’s important for workers to know the right time to walk away if their pay doesn’t match their contribution. Picture: iStock
“2022 was an eventful year for employment in Australia as high business confidence saw mass hiring across the nation and skyrocketing salaries,” Robert Half director Nicole Gorton said.
“As the market is shifting and businesses are ‘right sizing’ themselves, companies are taking a more cautious approach to their remuneration policy by predominantly rewarding salary increases based on the performance of their business.
“Even with the rising cost of living in the spotlight, there is no guarantee who will receive a pay rise this year, and how much. Salaries cannot and will not continue to rise at the rate they did in the previous two years.”
Ms Gorton said pay-related decisions “have become a balancing act”.
“Businesses need to ensure they are keeping pace with the market rate of roles they are recruiting for, and roles that their staff currently hold to avoid losing the skill sets they need to stay ahead of their competitors,” she said.
“But at the same time, they are increasingly scrutinising who receives how much extra pay given the changes in the market.”
It follows similarly bleak data from a new research report by global HR firm Deel and YouGov, which last week revealed almost two in five business leaders (38 per cent) expect to let employees go this year, with 15 per cent saying it will impact up to 20 per cent of their team.
Deel’s new “Australian Business Leader Pulse Check: Business Growth, Workforce and Hiring” report found that 92 per cent of bosses are battling rising costs and inflation at the moment, with 75 per cent of respondents indicating their businesses will take measures related to staff, including 32 per cent who plan to review or reduce overheads and 20 per cent who expect to consolidate departments or functions.
The findings come despite Australia’s cost of living crisis. Picture: iStock
Meanwhile, 45 per cent of senior business decision-makers cite rising operating costs as the top challenge in Australia in 2023, with 47 per cent opting to not offer pay rises at all as a result, or to offer raises to high performers only.
However, it’s not all bad news according to Robert Half’s findings, with the vast majority of businesses planning to introduce new workplace perks, including flexible work schedules (60 per cent), mental health programs (55 per cent), and remote work options (52 per cent) among the top benefits.
More than two thirds will enable employees to swap part of their salary in return for non-financial perks, such as holidays.
“With businesses putting careful thought and consideration into who will receive a financial incentive in 2023, many employers are turning to benefits as a substitute when a monetary increase cannot be offered,” Ms Gorton continued.
“Companies would benefit from looking beyond salary and considering the overall employee experience that differentiates them from their competitors and offsets the absence of a higher salary or pay increase.
“Benefits that support employees’ work-life harmony, such as flexible work hours, and hybrid or remote work arrangements are likely to be some of the lasting workplace legacies of the upcoming jobs landscape.”
When it comes to fighting for a pay rise, Robert Half suggests employees come armed with a record of their achievements over the past six to 12 months, set a timeline for a meeting, practice your pitch and state your case, stay up to date with market rates – and know when it is time to move on.
Inflation was still well and truly eating into the pay packets of Australian workers as the economic climate worsens. Picture: iStock
The findings come just days after new figures revealed that inflation was still well and truly eating into the pay packets of Australian workers, despite an increase in wages growth.
According to the Australian Bureau of Statistics’ latest Wage Price Index report released earlier this month, wages increased 3.7 per cent over the 12 months to the March quarter.
But inflation, while declining, is at 7 per cent – well above the Reserve Bank’s goal of 2-3 per cent.
The ACTU welcomed the growth in wages, but said there is still a long way to go.
“Even with inflation starting to fall, the latest wage growth figures are still growing at barely half the rate of inflation,” ACTU secretary Sally McManus said.
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“Measured over the past 12 months, workers have faced an average real wage cut of 3.3 per cent.”
Attention is now turning to the Reserve bank ahead of its next interest rate decision, which will be made on June 6.