Hays Salary Guide released: Salaries increase as skills shortage inflates expectations

 

 

• 88% of employers will increase salaries in their next review – up from 67%;
• 37% will award increases of 3% or more – up from 12%;
• 77% say the skills shortage has forced them to offer higher salaries than planned;
• Yet 84% of employees say an increase of 3% or more would reflect their individual performance and the demand for their skills.

More employees will receive a pay rise this coming financial year than last, with skills shortages creating a “once-in-a-career market”, according to recruiting experts Hays. The FY22-23 Hays Salary Guide, released today and based on a survey of over 4,400 (including 1,222 in New Zealand) organisations, found 88% will increase salaries in their next review, up from 67% last year. These employers are more generous in the value of increases, with 37% intending to raise salaries above 3%, up from 12% last year. But over half (51%) will increase salaries by less than 3%. According to Hays, employers say the skills shortage has forced them to offer higher salaries than otherwise planned – 34% ‘substantially’ higher and 43% ‘nominally’ higher. This pressure is most notable for construction, human resources, trades & labour, engineering, executive and sales professionals. Conversely, contact centre professionals are least impacted.

 

For their part, 84% of the more than 4,800 skilled professionals (including 1,279 in New Zealand) Hays also spoke to say their performance and the demand for their skills merits an increase greater than 3%. Over half (56%) say the skills shortage has made them more confident to ask for a pay rise and 54% have already benefited from the skills shortage through a salary increase, new job or both. Despite this, only 31% are satisfied with their current salary. Meanwhile, an uncompetitive salary is the top factor motivating 49% of job searches (up from 39% last year). It ranks ahead of a lack of promotional opportunities and poor management or culture.

 

	Employers’ salary increase intentions	Increase employees say reflects their performance and demand for their skills
Nil	12%	3%
Up to 3%	51%	13%
Above 3% but less than or equal to 6%	27%	35%
Greater than 6%	10%	49%

“Intense competition for skilled professionals will translate into gradual salary increases this coming financial year,” says Adam Shapley, Managing Director of Hays in New Zealand. “Moving away from the salary stability stance of recent years, employers say the skills shortage is the reason increases are higher than planned. Already 91% are experiencing a skills shortage. 83% say it will impact the effective operation or growth plans of their organisation, up from 64% last year. “This is fuelling a once-in-a-career market. Previously camouflaged by skilled migration, and further impacted by headcount growth, skills shortages have reached a level unmatched in our 46 years in recruitment and sparked deliberate salary increases from employers. “However, while both the value and extent of salary increases is rising, employees’ expectations are growing faster. In a job-rich, candidate-poor market, they feel more assured of their worth and have prioritised a pay rise. “In such a market, the number one question we’re asked by employers is how to stand out as their preferred candidate’s first choice.” Hays’s answer is a “new equation” for employers to follow. As Adam explains, “We suggest that today’s skills shortage presents an opportunity to define a new equation in the world of work. Salary increase budgets only extend so far, so consider the full value exchange for each role. Along with salary, consider benefits, upskilling, career progression, purpose, and the relationship employers have with their employees.”

 

In other key findings, the Hays Salary Guide found:

• Employers hold a positive outlook: 77% of employers expect business activity to increase in the year ahead, up from 72% last year. 43% expect the economy to strengthen in the next six to 12 months.


• Hiring intentions rise: 61% of employers intend to increase permanent staff levels in FY22/23, up from 47% last year. 36% will increase their use of temporary and contract staff, up from 15%.


• Benefits increase to attract candidates: 35% of employers have improved benefits and working practices to entice more staff. Flexible working continues to evolve, with 64% of employees looking for an adaptive hybrid approach. Purpose, equity diversity & inclusion, and sustainability are increasingly on candidates’ agendas, too.


• Lifelong learning is the new norm: 18% of employers cite upskilling as their key strategy to overcome the decreased access to talent. Meanwhile, employees have upskilled in the past year to improve their job prospects – 45% grew their technical skills, 36% their soft skills and 26% their digital skills. 15% reskilled.


• Mastering change: Organisations are preparing for their future, with 34% undertaking a workplace transformation in the past year to take advantage of economic opportunities.

Download your copy of the Hays Salary Guide by visiting www.hays.net.nz/salary-guide. - Ends - For further information please contact Kathryn Crowden at kathryn.crowden@hays.com.au or via Teams, or Clare Zacka at Clare.Zacka@hays.com.au