New data from global professional services firm Aon shows salary growth is holding firm. How that budget is spent makes a difference in retention
Australian employers are budgeting a median salary increase of 3.6 per cent for 2027. But HR leaders heading into planning cycles face a more pressing question: where does that money go?
Aon's 2026 Salary Increase and Turnover Study drew on pay planning and workforce data from 500 organisations across Australia, gathered between July and September 2026. It found the approach to directing salary investment is shifting markedly.
Separately, a WTW Salary Budget Survey found Australian salary increases projected to remain at 3.5% in 2026. Both data sets point to the same pattern: headline pay figures are stabilising, while strategic value lies in how that salary is deployed.
Which Australian industry has the highest voluntary turnover rate?
Among Australian industries, financial services posted the highest median voluntary turnover rate in the Aon study at 15.6%. Consulting, business and community services came in at 14.4%. Energy posted a median of 8.7%, according to Aon.
Employers in high-turnover sectors face growing pressure to identify which roles and skills are driving departures, then direct pay investment accordingly.
"Salary budgets remain relatively stable, but employers are becoming more deliberate about where they invest reward dollars," said Yvette O'Reilly, associate partner and talent data solutions business leader for the Pacific region at Aon in Sydney.
"The organisations achieving the greatest impact are not necessarily those spending more, but those making more informed decisions about where reward investment is directed."
Why is data-driven salary planning now essential for Australian employers?
Salary planning and workforce analytics are converging. Aon's study found that reward decisions are increasingly shaped by real-time turnover data, skills availability and forward capability planning. Historical benchmarks alone are no longer sufficient.
For HR professionals heading into 2027 budget conversations, pay strategy and people data need to be reviewed in tandem. Australia's minimum wage rose 4.75% from 1 July 2026; that lifts the baseline against which all employer pay budgets are measured.
"Workforce decisions have never been more complex, making access to reliable and defensible data essential for organisations," said Belinda Armenta, head of talent data solutions, Asia Pacific at Aon.
AI, economic shifts and evolving workforce expectations are forcing organisations to move beyond traditional pay benchmarking. “The ability to understand compensation trends, workforce movement and emerging talent risks is helping leaders make more confident decisions about attracting, retaining and developing the workforce they need for the future," Armenta said.
Organisations with early visibility on at-risk roles can redirect pay investment before talent walks out the door.
How do 2027 salary budgets compare across industries?
Projected 2027 median increases range from 3.5% to 4% across Australian sectors. Retail, hospitality and technology organisations are projected to lead at 4%. Most industries sit near the 3.6% national median, according to Aon.
Similar headline budgets do not produce similar outcomes. Employers directing pay towards high-criticality and high-risk workforce segments are outperforming peers that distribute increases evenly.
The data on where turnover risk is concentrated, and which roles are most critical to 2027 performance, should be driving allocation decisions. Organisations that build that analytical discipline now will enter next year's planning cycle ahead of those still distributing increases on autopilot.
