Are you in line for a pay rise this year?

Our Hays Salary Guide FY24/25 revealed that employers intend to invest in their people again this financial year, although not quite to the extent of last year’s high. Australia’s skills shortage has settled slightly, likely reducing salary increases for some professionals this year. But with an upper limit to the raise organisations can offer, it’s vital to consider the whole employee experience on offer, not just the dollars.

Employers are feeling more confident than last year – 64 per cent are expecting business activity to increase in the year ahead, up from 55 per cent last year. Despite this confidence there has only been a 3 per cent rise in organisations looking to increase permanent staff levels.

Many organisations are looking to temporary staff as part of their hiring plans – up seven per cent from last year. The challenge of finding the right talent remains but is easing. We found that 47 per cent are no longer experiencing skills shortages. Construction had eased the most, while there are still some skills shortages in education, defence and architecture.

To counter these challenges, and to address the rising cost of inflation, organisations are expanding headcounts and increasing both the number and value of salary increases – we found that 86 per cent of employers intending to increase salaries. A slight decrease from last year’s high of 95 per cent and 88 per cent the year before.

Performance: The top reasons for awarding salary increases

With the skills shortage easing, there has been a return to fairly traditional reasons for employers awarding salary increases. Individual performance is number one at 84 per cent, followed by responsibilities of the role at 74 per cent.

Expertise (53 per cent), typical external salaries for the role (52 per cent) and the organisation’s performance (50 per cent) all jostle for the third most important factor.

Will I receive a pay rise in my next review?

To see if your skills are in line for a salary increase this year, visit our online Salary Checker to view the highest, typical and lowest salaries for your job.
 

How much should my salary increase each year Australia

Annual wage growth across the board in Australia averages out at three per cent, but what a reasonable pay rise looks like differs by industry. Some industries grow at a faster rate than others, with Australian employers also basing salary increases on other factors such as company policies, as well as your specific job role and performance.

Experience of recent years drive up employee expectations

The last few years that have seen incredible change in how people work, their flexibility and adaptability, combined with skills shortages, has changed how employees feel when it comes to salary increases.

Back in 2019 67 per cent of employees expected a pay rise less than 3 per cent, that has now flipped to a point where in the recent salary guide 61 per cent expect a raise greater than 3 per cent.

Money matters: The cost-of-living factor

In addition to employees’ expectations, employers are coming to the party for one huge reason – the cost of living. The cost-of-living factor has risen a massive 750 per cent as the main reason employers consider when giving pay rises in general. This is followed by recent salary offers made to new starters (up 300 per cent from last year).

The same applies to employees, with the cost of living the number one factor for seeking an increase at 64 per cent.

Design the employee experience

To bridge the expectation divide, employers and professionals should look beyond just the numbers and consider the entire employee experience being offered.

While employers recognise the importance a competitive remuneration offering, professionals are seeking more than just financial compensation. The benefits on offer, the company culture and the wider organisation’s values and purpose also drive decisions on who to work with and for.

Employers are prioritising benefits that help them build a skilled and capable workforce to improve productivity, customer satisfaction and profits. Training, ongoing learning and development and career progression opportunities are the top three benefits they provide.

While salary was the number one benefit that employees were seeking at 71 per cent, three of the next five benefits they were looking for all related to learning and development. Learning technical skills (63 per cent), learning soft skills (45 per cent) and digital skills (43 per cent).

If your salary increase fails to live up to expectations, consider whether additional emotional salary benefits can bridge the divide.

If all else fails, consider your options

Of the skilled professionals we surveyed, 77 per cent are currently looking or planning to look for a new job in the next 12 months.

For professionals with skills in demand, the time may be right to consider an external move to speed up your progression. If you are considering your options, we invite you to share or update your CV so we can bring opportunities to you directly.

Incentives employers can offer when regular pay rises can't keep up with inflation

The first prize for rewarding employee performance is to simply offer wage growth that keeps up with the cost-of-living inflation, especially with the tight labour market making talent difficult to replace. However, sometimes a pay increase like that isn't reasonable when considering the performance of the business as a whole.

When this happens, there are a few steps employers can take to continue being a competitive option in the industry:

Performance bonuses

Employers can offer performance-based bonuses that are tied to achieving specific goals, targets, or milestones. These bonuses can be an effective way to reward and motivate employees based on their individual or team performance.

Flexible working arrangements

Greater flexibility in working hours or the option to work remotely helps employees save on commuting costs, reduce stress, and achieve a better work-life balance, which indirectly compensates for the impact of inflation.

Additional perks and benefits

Employers can enhance their employee benefit packages with non-monetary perks. These can include increased paid time off, improved healthcare coverage, gym memberships, wellness programs, childcare support, and educational assistance.

Download the Hays Salary Guide

Our annual Hays Salary Guide is based on a survey of over 15,000 professionals. Download your copy to access typical salaries and insights relevant to your job and career path.