Employers offering 4% pay increase in two-speed economy

by HCA28 Nov 2011

Australian employers have offered employees a median 4% pay increase in the 12 months ending in July this year, compared to 3.5% in the previous 12 month period.

According to Mercer’s Market Issuessurvey, the salary increase during the 2010-11 was not only felt in the lucrative mining and resources sector, but across many other industries as well.

However, the mining sector well and truly outpaced other industries, and experienced salary increases of an average 6%.

Anthony Shippard, principal in Mercer’s information product solutions business, said while many Australian organisations remaincautious in their salary allocations, the resources sector is playing in a league of its own.

The mining epicenters of Western Australia and Queensland experienced median salary increases of 5.2% and 4.5% respectively, compared with New South Wales and Victoria at 4% and South Australia 3.9% - although SA rose substantially from 3% the previous year.

Higher pay increases were also evident in industries which service the mining sector, such as the construction and engineering sectors, which both experienced a median salary increase of 6%.

On the other side of the coin, retail continued to struggle in the face of poor consumer confidence and reduced spending, and came in at just a 3.1% increase.

Shippard said that while “cashed-up” resources organisations are placed to pay a premium to attract and retain in-demand skills, retail sector employers are battling lower consumer spending and falling profits. “The retailers simply can’t afford hefty pay rises without the revenue to fund them,” he added.

As the economy continues to experience turbulence off the back of the Euro and US debt crises, Mercer encouraged employers to look beyond cash to retain staff.

“The survey found 80% of employers are having trouble retaining staff, but salary alone won’t solve the problem and certainly hasn’t been able to reduce turnover following the past two years of salary increases. In fact, the sector that gave the biggest pay rises – construction and engineering – was also the worst affected by retention issues: 100% of respondent organisations reported retention problems,” Shippard said.

He added that in the absence of big salary budgets, organisations need to focus on other drivers of attraction and retention, including leadership and culture.

“Employers need to address the fundamentals of good people management. This includes developing strong leaders, providing clarity around career development, delivering quality training and development and putting succession plans in place. These are the strategies that create a loyal workforce,” Shippard said.



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