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Salary Packages Reflect Tight Labour Market

Media Release

13 October 2005

Salary Packages Reflect Tight Labour Market

Salary trends for the year 2005 mirror quite closely the state of the job market and continue the 2004 trend towards non-monetary rewards.

Data collected in the Auckland Chamber of Commerce's 2005 annual salary survey indicated the low unemployment rate, but, in particular, the skills shortage influenced income packages over the past year.

Chamber Chief Executive, Michael Barnett commented “There have been substantial hikes in total package in areas where skills are known to be in short supply. Evidently, if you need them, you reward them.”

In the productive sector, the rewards for hard-to-find skilled workers versus still relatively available unskilled were very evident. The gap between incomes for skilled and unskilled staff actually widened by around 30%.

The occupations, where incomes increased higher than average, included staff tasked with boosting productivity on the production line or in projects. Construction Managers, in particular, seemed to do as well as anyone in New Zealand with substantial increases in total income package.

Also being recognised were those with academic qualifications or who had benefitted from workforce training and staff employed driving business technology.

Human Resource practitioners, where high ability was sought in a tight market to find the right people, recruit them then to retain them, were well rewarded too.

In a large number of roles, where salaries remained relatively stable or even decreased, there was a big jump in other components of the income package, such as commission levels, incentives and performance bonuses.

“Employers are evidently maximising opportunities to incentivise staff, where performance can be measured, to create a “win/win” or, at worst case, a “don’t lose” relationship with staff” said Mr Barnett.

Marketing Managers, Telephone Salespeople, Travel Consultants and Carpenters were all able to increase their overall package through “other income” items, despite base salaries remaining more or less unchanged. “The ratio of commission to retainer for some sales people jumped from around 2 to 3% to as much as 30%.” added Mr Barnett.

There were also some interesting “hierarchical” variations. The fact that accountants and credit controllers took an average reduction in total salary, did not deter their bosses, Financial Controllers, from gaining an increase.

Still in demand IT Managers and Systems Managers took double digit increases, whilst subordinate Database Administrators suffered a double-digit average decrease.

However on the other hand, whilst Production Managers only took a modest increase in line with inflation, Production Foremen achieved a significant average income increase.

Salary packages for CEOs, General Managers and Branch Managers scarcely changed.

With skills shortages continuing to be cited in Chamber surveys as the most serious barrier to growth for New Zealand business, it is becoming more important than ever that employers employ a competitive salary strategy in terms of both salary and non-monetary recognition of employee efforts.

“Competitive means neither paying too much, nor too little” stressed Mr Barnett. ”The strategy is about positioning a business in terms of its remuneration. For instance, it might choose to pay positions where staff are relatively available at “average”, but be prepared to move into the higher quartiles for essential skills, which are not so readily available.”

It may also be appropriate to employ more flexible policies to attract badly needed skills. “Having the availability of such a skill for four days per week may be better than employing a lesser skilled worker for five days per week” he concluded.

ENDS

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