Australian employers might be feeling more generous than last year, but some employees are more likely to get a pay rise than others.
Two thirds of workers believe they should get a decent pay rise this year, but just 12 per cent of employers intend to offer one.
Although business confidence is increasing and the jobs market is heating up, most companies are still hesitant to fatten pay packets in order to keep their top talent.
Recruitment agency Hays’ Salary Guide for the 2021-22 financial year, released today, reveals 67 per cent of employees in Australia and New Zealand believe they deserve at least a 3 per cent increase based on their individual work performance – and 26 per cent expect to receive this at their next review.
Unfortunately, just 12 per cent of employers intend to offer this level to the majority of their staff, whether part of an enterprise bargaining agreement or individual performance review.
It is down from 25 per cent of employers in 2019, before the pandemic, but up from 10 per cent last year.
Hays Australia and New Zealand managing director Nick Deligiannis says he is not surprised so many employees are looking for a pay rise in the next 12 months.
“There are a lot of opportunities in the marketplace at the moment, which is very different to last year when most employees were just happy if they could retain their job,” he says.
“Thinking about career progression and getting a salary rise was shelved for many.
“Today, recruitment has gone up, there is a lot of vacancies in the marketplace, and employees are saying ‘we did the hard yards over the last year, salaries have stayed still, and now we have opportunity, we want to address that’.”
Over the next 12 months, 32 per cent of employers say their staff is unlikely to receive a pay increase at all, and 1 per cent predict a salary decrease.
On the flip side, 55 per cent plan to increase pays by up to 3 per cent; 10 per cent forecast a jump of between 3 and 6 per cent; and 2 per cent will offer at least a 6 per cent bump.
Deligiannis says although the average employer plans to offer only a low pay rise this year, some sectors are likely to outperform others – including legal, architecture, technology, accountancy and finance, mining and sales.
Pay rises are driven by skill shortages partly caused by international border closures.
So, apart from being in a high-demand sector, how can you best position yourself for a pay rise this year?
TIPS FROM THE EXPERTS
1 TAKE NOTES AS YOU GO
Career coach Jane Jackson says workers should take stock of work achievements every week.
“If you do this regularly, it won’t take a lot of time and it will help you to acknowledge the value you bring to your role,” she says.
“At the end of each week, take a look at what you did that was above and beyond the responsibilities of your job.
“Did you save time, money, streamline a process, mitigate risk, improve a situation?
“Over the course of several months you will have many mini accomplishments to celebrate.
“If you document them and express the actual result of your actions, then they will form the basis for salary negotiation when the time comes.”
Career coach Jane Jackson recommends documenting small achievements throughout the year.
2 PROVE YOUR CONTRIBUTION
Jackson says the best way to highlight your accomplishments in a salary negotiation is to use the “problem, action, result” methodology, addressing each of those points when explaining the contribution.
“What situations or problems have you encountered that required you to take specific actions that resulted in a positive outcome?” she says.
“If that outcome is a dollar savings, time savings, processes streamlined and other positives then that will prove to your boss that your request for a raise is worth considering.”
3 TIME THE CONVERSATION WELL
Jackson says it is important to consider how well the business is doing before asking for a pay rise.
“If the business has been hit badly by COVID-19 restrictions, then now is not the time for this discussion,” she says.
“However, if you know that the business is thriving and you are a contributor to its success then this is a positive sign for you if you can prove your contribution and provide tangible results of your efforts.”
It may make sense for a worker to wait for their annual review, but this is not always necessary.
“If you feel you are grossly underpaid and it is causing resentment to build up and it is affecting your performance at work, then setting up a conversation with your manager may help to relieve this,” she says.
4 HAVE A BACK-UP PLAN
If the boss rejects your request for a pay rise, Jackson recommends asking for the reason and to revisit the conversation in three to six months.
“Ask what you would need to do to get to the next level in your salary,” she says.
“If you can get specific KPIs (key performance indicators) documented by your boss and you meet them, then you will be in a good position for a raise the next time you ask.”
Some workers may also request non-financial benefits in lieu of a pay rise.
The Hays Salary Guide reveals 22 per cent of employees plan to ask for additional benefits at their next review.
These could include having more than 20 days of annual leave (30 per cent of employees want this), flexible work arrangements (79 per cent) or increased career progression opportunities (52 per cent).
5 BE PREPARED TO LEAVE
Jackson says a worker whose requests for a salary increase have been repeatedly denied may want to start applying for jobs elsewhere.
“If you are made an attractive offer that you are tempted to take, approach your employer and let them know that this is what you are worth in another business – you may receive a counter offer,” she says.
However, she advises against applying for outside roles simply for the goal of receiving a counteroffer.
This can sometimes backfire when the employer realises the worker is willing to leave the company.
WHO’S GETTING A RAISE
(Portion of employers planning to give the majority of staff a pay rise of at least 3 per cent in the next 12 months)
Accountancy and finance 17%
Contact centres 8%
Facilities management 6%
Human resources 8%
Life sciences 13%
Manufacturing and operations 10%
Marketing and digital 9%
Office support 9%
Policy and strategy 13%