3 in 5 Australian employers facing unrealistic salary demands

How many are withdrawing job offers because of too-high salary expectations?

3 in 5 Australian employers facing unrealistic salary demands

Are employees losing their sway when it comes to salary demands?

Three in five (61%) Australian employers have had a candidate request an unrealistic salary in the past 12 months.

By how much? These candidates requested an average of 16% above the salary initially offered to them, according to Robert Half’s 2023 salary guide.

As a result, 14% of employers say they withdrew a job offer because of the candidate’s high salary expectations.

“Candidates are requesting salaries above their grade of experience and technical abilities, which is considered ‘unrealistic’ by Australian employers,” Andrew Brushfield, Robert Half director, said.

“An unrealistic salary is regarded as one that pays substantially above the level of skills, wealth of knowledge and experience the candidate can bring to a role.”

Advertised salaries across Australia went up 4.7% annually, but monthly data from employment marketplace SEEK suggests that growth is slowing down.

Higher salary demands

Many Australian employers paid premium salaries to secure skilled talent as business confidence grew post-pandemic, with the Wage Price Index also experiencing its highest growth in a decade, growing 3.3% in 2022.

“Candidates who were able to obtain a higher salary than advertised are the ones who offer sought-after skills which are hard to come by in today’s market and make a significant difference to a business,” Brushfield said.

“Professionals in the cyber-security and network engineering space are an example of candidates who have higher bargaining power with employers due to the supply harshly exceeding the demand for their specialised skills.”

Nearly half of Australian managers said they had to overpay new hires in the past year due to market competition and high expectations from candidates.

Regional trends for salary requests

NSW employers were most likely to encounter unreasonable demands with almost seven in 10 (68%) business leaders receiving unrealistic salary requests, finds Robert Half. Queensland employers received the least, with about half (53%) citing this trend.

“With Sydney being the financial centre and economic hub of Australia, there are plenty of skilled professionals in NSW competing for jobs,” Brushfield said. “The population of skilled talent in Sydney adds to employers facing unrealistic salary requests more often than in other states especially after inflated salaries were a common occurrence in the city.

“Additionally, the cost of living in Sydney is higher than in other major cities, resulting in more people requesting higher salaries in a bid to stay on top of inflation and cost of living pressures.”

Medium-sized employers have been the most likely to encounter the unreasonable demands, with two-thirds (66%) citing this situation, similar to 62% of large employers, and just over half (56%) of small business employers, finds the Robert Half survey.

Walking away

As a result, 23% of candidates walked away from the original job offer in search of a better job opportunity elsewhere.

“These candidates are walking away from job offers if they feel they can secure a higher starting salary with a different employer,” Brushfield said.

“During a severe lack of talent across the finance, technology and business support sectors, inflated salaries were used as a way to lure talent into a business, but as companies start to reign in their inflated salary offers in the wake of economic uncertainty this year, candidates feel like they can find a better salary offer elsewhere.”

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