Australian wage growth will be among the slowest in the world this year, a global management consultant has suggested, after analysing data on 20 million workers across 110 countries.
Korn Ferry analysed the pay data of over 20 million employees working in 25,000 organisations around the globe, and asked HR leaders to predict the salary increases in real terms across the 110 nations represented among the data.
In a bad sign for workers as well as businesses reliant on consumer spending, such as retail, Australia was singled out as having among the slowest wage growth forecasts of any country, rising by just 0.2 of a percentage point in 2019.
That is well below the global average rise of 1 per cent, driven largely by strong wage increases in Asia (2.6 per cent) and Eastern Europe (2.0 per cent).
Even the UK, under the cloud of uncertainty from Brexit, is expected to see wages grow at three times the rate of Australia (0.6 of a percentage point), a similar pace to that anticipated in North America.
Western Europe is forecast to see wages rise by 0.7 of a percentage point. New Zealand, meanwhile, is expected to see wage growth more in line with Australia, edging up by 0.3 of a percentage point.
The Pacific region as a whole posted the lowest anticipated growth by region at 0.3 of a percentage point.
According to Korn Ferry’s 2019 Salary Forecast, Australian wage growth has consistently trailed the global average since 2012.
It said that such sluggish wage increases could lead to an ongoing problem of attracting and retaining talent in the global workforce.
“Australia has always relied heavily on its high standard of living and lifestyle, but with our high cost of living and virtually stagnant wages, organisations must take action to motivate and retain exceptional talent,” the firm’s associate client partner, Trevor Warden, said on release of the findings.
“Consistent low increases can lead to employee disengagement, so organisations must consider whether they are offering a compelling overall rewards package — otherwise, they face losing valued employees.”
The challenge for employers offering subdued wage increases will be staff retention and maintaining productivity rates.
Mr Warden said that employers will need a “flexible and agile” approach to remuneration in the months and year ahead, focusing on creating less hierarchical and linear career paths for their teams to meet business needs and changing market conditions.
“Paying your people correctly is important, but is only one of the things that contributes to an engaged workforce,” he said.
“When pay is barely rising, it’s career development, clarity on how people contribute and leadership that inspires people, which become even more important in retaining and motivating employees.”
He added: “Organisations should take a holistic approach to talent acquisition and retention, and review their employee value proposition to make sure it’s a compelling offer for the best talent. Because we know when employees feel motivated, they’re more likely to stay and perform.”
Technologies in business: Some work, some don’t (yet)
By Adam Zuchetti
What business can learn from the military
By Adam Zuchetti
Veterans a smart choice for your business
By Adam Zuchetti