Small margin pay rise the new normal for New Zealand workers

Media Release

Small margin pay rise the new normal for New Zealand workers: Mercer

21 November 2012

New Zealand workers received a 3.2% pay rise over the past 12 months, with "guaranteed" annual hikes in pay becoming a distant memory for employees, according to Mercer’s latest salary survey.

Mercer’s New Zealand Total Remuneration Survey of 190 organisations reveals salary increases rose only marginally from 3% in 2011.

Sarah Barnaby, Senior Associate in Mercer's talent business, said certain sectors and jobs are receiving above average pay rises, but the days of hefty pay packages for all Kiwis are well and truly over.

“Employees should not expect pay rises of 5% or more - as seen before the recession, in fact 48% of organisations are giving staff less than a 3% pay rise and have no plans to change this.
“While the median salary movement is reasonably constant at around 3%, we have seen specific sectors provide larger increases to retain talent. On the flip side, there are certain sectors which are struggling to regain consumer confidence and we have seen a related impact on salary increases,” Ms Barnaby said.

The biggest salary increases are in project engineering roles, which rose from a 3.2% increase in 2011 to 9% in 2012. Senior management slipped from a 2.5% increase to just 1.9% in the last 12 months. However, administrative and front line customer service type roles are now receiving 5.1% pay rises, up from 3.5% in 2011.

“As the Christchurch re-build gets underway, demand for labour has increased pressure on salary budgets for critical jobs, such as those in construction and engineering. Christchurch residents working on the re-build are in a prime position to continue receiving significant remuneration packages in light of their vital skill set,” Ms Barnaby said.

In terms of regional salary movements, Auckland has slipped from the top spot, shifting from a 3.8% increase in 2011 to 3% this year. Christchurch is pushing ahead, with pay rises moving up from 2% in 2011, to 5.8% in 2012. Pay movements in Wellington are the lowest for the country, sitting at just 2.8% whilst regional areas are slightly above the national median at 3.5%.

Ms Barnaby said organisations must continue to target their salary budgets towards high performers and areas of skill shortages in the business.

“While we have seen the latest unemployment rate increase to 7.3%, New Zealand businesses still face critical skill shortages in key industries and sectors, with the continuing trend of Kiwis moving to Australia only exacerbating the problem. Given most organisations have limited budgets for fixed pay movements; they will need to look for alternative ways to engage and retain top talent.

“So what can they do? Most organisations have an opportunity to use benefits more effectively by being creative and aligning them with particular employee groups. Innovative and effective benefits programs can have a measurable impact on retention and engagement, and can be used to meet diverse workforce needs across age groups. Employers need to understand which benefits are highly valued by employees, rather than what they, as an organisation, view as important or desirable to maintain an engaged workforce,” Ms Barnaby said.

Graph one: Job Family movements:

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Graph two: Regional movements:

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About Mercer
Mercer is a global consulting leader in talent, health, retirement and investments. Mercer helps clients around the world advance the health, wealth and performance of their most vital asset – their people. Mercer’s 20,000 employees are based in more than 40 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy and human capital. With 52,000 employees worldwide and annual revenue exceeding $10 billion, Marsh & McLennan Companies is also the parent company of Marsh, a global leader in insurance broking and risk management; Guy Carpenter, a global leader in providing risk and reinsurance intermediary services; and Oliver Wyman, a global leader in management consulting. For more information, visit www.mercer.co.nz. Follow Mercer on Twitter @MercerInsights.

ENDS

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