Salary growth sluggish but improving

A forecasted increase in business confidence will not translate into significant raises in 2013-14, according to the annual Hays Salary Guide. The survey of more than 1,600 employers, which also includes data generated by Hays placements, covers salary and recruiting trends for more than 1,000 roles across 14 locations in New Zealand and Australia.

This year, the survey registered an increase in employers who believe that the economy will strengthen in next 6-12 months: from 27% in 2012 to 40% this year. In addition, 68% of employers are counting on increased business activity within their own organisations.

However, despite this optimistic outlook, the majority of employers (57%) plan salary increases of less than 3%. Around one third, 32%, are planning on raising salaries by 3-6%, two percent put this figure at 6-10%, and a miniscule one percent at more than 10%.

“Employers will need to manage employee expectations around salary increases carefully and ensure that their top performers feel rewarded if they want to retain their best staff,” Jason Walker, managing director of Hays New Zealand, said.

There is some good news in the fact that fewer employers are planning on stalling salaries this year compared to last: 8% in 2013 versus 11% in 2012. “But looking ahead salary growth will be modest despite the expected growth in confidence in the economy,” Walker said.

Hays Salary Guide also considers hiring outlook. When asked about their permanent headcount over the next year, 37% of employers responded that they were planning on increasing hiring. The vast majority of these employers (83%) reported that these roles would be full-time, while one fifth said they would be part-time, 14% were expecting to hire casual staff, and 17% temporary staff.

The two strongest sectors in terms of demand for talent were the engineering sector, where 60% of employers are planning on hiring, and project management (49%).