As living costs outpace wage growth, HR leaders say a well-targeted benefits package can decide whether talent joins or walks away
More than three in five (63 per cent) Australian employers have watched a candidate accept a job despite a salary shortfall, purely on the strength of the benefits on offer.
With the latest ABS data revealing annual wage growth is sitting at 3.2 per cent in the June quarter of 2026 and real wages still falling year-on-year, the pressure on employers to compete on something other than pay has only intensified.
The benefits conversation has moved from a nice-to-have to a core part of the employee value proposition, but only when what's on offer is relevant, not just plentiful.
Lauren Waddell, Victorian vice president of the Australian HR Institute (AHRI) and HR manager at visual effects house Framestore, has built her benefits strategy around exactly that principle.
"Benefits is such an interesting space because it's almost like an economic indicator sometimes to tell you what's actually happening in workplaces," she said.
"Certainly since COVID it's changed a lot, because some of the things that were benefits pre-COVID are now just a given. Flexible work or remote working, we used to pitch those as something we offer that other places don't. Now they're a standard, and we've had to go out and find new things, in quite a tight economic environment."
Legacy perks give way to smarter benefits spending
Waddell points to employee assistance programs (EAPs) as the clearest example of a benefit that has been overtaken by expectation. "EAPs used to be something we'd pitch as a really exciting benefit," she said.
"Now, with the new psychosocial safety laws, it's compulsory. You pretty much have to have an EAP. So all of these things that used to be exciting are now offered as standard, and we have to refresh our whole mindset of what's the next benefit that can come through."
She includes office perks such as kitchen food and workplace design in the same category: "Those things are just standard and part of what people expect now."
The task for HR teams, she said, is finding benefits that genuinely help staff without hitting the bottom line. "Finding benefits that work for employees but aren't a huge expense to the business has become a really big priority in the last few years."
Novated leasing and health cover deliver measurable value
At Framestore, which recruits visual effects talent globally and regularly relocates staff to Melbourne, Waddell has leaned on benefits that ease the cost of settling in Australia, such as discounted health insurance, gym memberships and, most notably, novated leasing.
"Moving to Australia, getting a car is essential, and novated leasing pops up straight away as something people are really excited about, because we can't buy people cars," she said. "It was a nice in-between to help get people settled."
There is a growing shift toward mobility-focused benefits programs as employers look for perks that deliver real financial value without adding to their own costs.
Simon Southwell, chief executive of Positive Salary Packaging (PSP), said the data backs up what Waddell is seeing on the ground.
"Employees are increasingly taking an active role in sourcing the benefits they want," Southwell said, pointing to a 32 per cent year-on-year rise in employee-originated demand for novated leasing recorded by PSP in 2026.
"This suggests the benefits conversation is increasingly flowing from employees into the workplace, giving HR teams another signal of what their people value."
Southwell added that PSP's own employer base grew 18 per cent over the same period, which he said reflects HR teams looking for benefits that deliver value while remaining practical to administer.
"The perceived effort of offering a benefit shouldn't be a reason to leave employee demand unmet," he said.
Turning employee feedback into benefits policy
Waddell said Framestore relies on direct conversation over formal surveys to shape its benefits mix. "We have a fortnightly rotation of meetings with leadership and with all staff. We track really closely the engagement on current benefits. We've offered a couple of different gym memberships, some weren't as popular, so we've dropped a few and brought a couple of others on."
A request for help covering the cost of home-office tech, for instance, led Framestore to introduce salary sacrificing for equipment. "That came out of people coming to us and asking, what can I do, this stuff is so expensive," she said.
That responsiveness, Waddell argued, matters more than the size of the benefits budget. "Sometimes you think something's going to be really popular and it's not, or vice versa," she said, citing an unexpectedly popular staff discount on eyewear.
"It can be a little unpredictable, but there's core things people really love, and it becomes a really important tool for attraction and retention."
With wage growth unlikely to outpace inflation any time soon (real wages fell 0.8 per cent through the year to the June 2026 quarter despite a quarterly rise), HR leaders across Australia may increasingly find that a sharper benefits strategy, not a bigger pay packet, is the more realistic lever they have to pull.
