With wages growth still tracking below its long-term average, employers are being advised to prepare for a sharp rise in the number of workers asking for a pay rise this year.
The Fair Work Commission recently suggested that there is “no definitive explanation” for why Australia’s rate of wage growth is continuing to sit at or near record low levels.
Wage growth ticked up slightly according to the latest reading from the ABS, with average total weekly earnings up by 2.2 per cent in the year to November 2018, but remains well below the historical average of 3.2 per cent.
That growth is unlikely to pick up substantially in the near future, however, with a global survey suggesting that Australian wages will post among the smallest increases this year of the 110 countries it looked into.
But that is unlikely to stop workers from increasingly reaching out to their employer to ask for a pay rise, according to global recruitment firm The Adecco Group.
It asked some 5,000 Aussies — both employers and employees — to share their thoughts about pay, and found that 57 per cent of employees are planning to request a pay rise from their boss.
Many of them may actually get one, it added, finding that more employers plan to increase salaries this year than they did in 2018 (86 per cent compared to 69 per cent).
Manufacturing and IT businesses are the most likely to give large increases of more than 7 per cent.
However, there appears to be a mismatch in the expectations of both parties, with close to half (45 per cent) of employees anticipating an increase of between 3 per cent and 7 per cent, while one in four (26 per cent) are seeking a rise of more than 7 per cent, Adecco found.
Men are also more likely than women to seek a pay rise this year (63 per cent versus 50 per cent).
By age group, over 55s are the least likely to seek more money, with 41 per cent suggesting that they plan to do so in 2019. That compares with 58 per cent of people aged 18 to 30, and 65 per cent of those between 31 and 45 years of age.
“It’s important that all deserving employees benefit from raises, rather than just those that are most vocal,” the group’s Australian CEO, Rafael Moyano, said.
“Our research shows that women and older workers are less likely to ask for increases, making it essential for companies to ensure that everyone is paid what they deserve.”
What can employers do?
The good news for employers is that there may be an alternative to dishing out large wage increases, particularly among businesses struggling under cost pressures.
Adecco’s research found that workers rank career progression options higher than salary.
When asked about what would cause them to leave an organisation, 44 per cent said that a lack of career development would cause them to look elsewhere — considerably higher than the 25 per cent who nominated concerns about pay.
Many, though not all, employers surveyed already look at such options: the survey found that 65 per cent of employers offer benefits apart from salaries, with the most common being study support for new qualifications, car allowance and additional annual leave.
More than half (55 per cent) also offer annual pay reviews for all staff; however, 26 per cent confessed to having no annual salary review process in place, while 19 per cent said that such a process only exists for certain staff.
“While salaries are important, employers must also offer professional development opportunities to keep staff engaged,” Mr Moyano said.
“Workplace training and investment in professional study can help, but this must be accompanied by regular performance reviews. The provision of clear goals means employees can track their own progress and feel empowered to move their careers forward.”
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.