But salary increases might not be enough as employees put more value on benefits
More than nine in 10 employers (96%) across Australia are planning to give pay rises to employees this year, according to a new report from Robert Half.
Nicole Gorton, director at Robert Half, said the hike indicates employers' continued optimism from last year when they offered the highest annual increase in wages since 2009 — despite 2023 being a "turbulent year."
"This optimism is set to continue in 2024 with the majority of employers willing to offer salary increases, driven by annual inflation being more than twice the average of the previous decade and companies' focus on retaining their talent," Gorton said in a statement.
Robert Half's 2024 Salary Guide also showed that majority (34%) of employers plan to provide a salary increase based on a pre-determined flat rate. Others plan to:
- Link a pay increase to individual employee performance (28%)
- Boost each worker's salary by the same flat amount, in a way that is similar to receiving a bonus (15%)
- Increase salaries matching with inflation (14%)
- Provide tenure-based increases (5%)
Impact of salary increases
Despite offering pay hikes this year, 20% of employers said increasing salaries is affecting their business revenue and profits.
Another 27% said their organisation must keep balancing business stability and helping staff with the cost of living.
"Pay-related decisions have become a balancing act. Businesses still need to ensure they are keeping pace with market rates for both new recruits and existing staff, while considering the potential impact of pay increases on their operations or company financials," Gorton said.
As employers hike salaries, they outlined the following potential impacts on their workforce and customers:
- Cut overheads to provide salary increases (19%)
- Sacrifice profitability to support staff with the cost of living (18%)
- Pass on the cost of increased salaries to customers via price increases (17%)
"Re-evaluating and regularly benchmarking their remuneration policy against market changes without cutting too deep into the bottom line is essential to remain competitive and successfully meet the demands of the current job market," Gorton said.
Salary increases not enough
But salary increases might not be enough to convince jobseekers to accept job offers, according to the report. Majority of candidates cited salary as their prime motivator, but they noted other factors that would make them turn down a role:
- Lack of career development opportunities (43%)
- Corporate culture not matching their expectations (33%)
- Having a bad experience with a future direct manager during the hiring process (29%)
- Company's bad reputation on social media or in the news media (29%)
According to the report, Baby Boomers are more likely to reject (64%) an offer based on its salary when compared to other generations such as Millennials (56%), Gen X (57%), and Gen Z (58%).
"Even though salary continues to be king, the days when pay was the sole motivator are over. Many professionals look beyond salary and consider the overall offering when evaluating salary packages," Gorton said.
"Businesses that cannot match the salary offered by competitors can therefore still get creative with non-monetary methods to gain an advantage with candidates and employees."
HR professionals in demand
Meanwhile, the report also found that human resources professionals are in demand across many organisations this year, with their national average salaries being:
Source: Robert Half
Other permanent roles that are in demand belong to the finance, technology, business support, as well as financial services sectors.
Gorton said candidates for these in-demand roles will have "better bargaining power" to negotiate for better salary, perks, and benefits.
"With future growth at stake, businesses need to think strategically about who they want to bring on board," the director said.
"Competition for talent is no longer at a fever pitch, but lengthy hiring timelines and vacant roles are a resource-intensive drain on business productivity, so drawn-out salary negotiations with candidates can negate potential cost savings for the employer."
