Will you receive a pay rise this year?

'Tug of war’ over salaries: Will you receive a pay rise this year?

Updated: 21 May 2019

• 68% of employers will increase salaries by 3% or less;

• 56% of professionals say a pay rise is their number one career priority this year;

• An uncompetitive salary is one reason why 40% of jobseekers look for a new job.

More New Zealanders will receive a pay rise this year than last, but it will be a less significant increase than they hoped for.

According to the FY 2019/20 Hays Salary Guide, released today and based on a survey of close to 900 employers in New Zealand, representing over 259,000 employees, 94% will increase salaries in their next review, up from 92% who did so in their last review.

However, the value of these increases will fall. Over two-thirds (68%) intend to raise salaries at the lower level of 3% or less, up from 60% who did so in their last review. At the other end of the scale, just 6% of employers, down from 13%, intend to grant pay increases of more than 6%.

Meanwhile, 20% intend to increase salaries at the mid-level, between 3 and 6%, up slightly from 19%.

Professionals prioritise a salary increase

For their part, New Zealanders seem resigned to minimal salary increases from their current employer. More than 60% of the professionals Hays also spoke to expect no pay rise or a raise of sub 3% this year. Yet while these professionals anticipate little or no increase, they’re not going to sit idly by and accept it.

In fact, more than half (56%) say a salary increase is their number one career priority this year. 53% intend to achieve this by asking for a pay rise, while others are looking elsewhere – 40% of jobseekers say their uncompetitive salary provoked their job search.

“Tug of war over salaries”

“New Zealand’s unrelenting skill shortage shows no sign of abating, but this talent gap is not leading to substantial salary increases,” says Adam Shapley, Managing Director of Hays in New Zealand.

“Instead, we’re seeing a tug of war over salaries. On one hand we have employers telling us they’ll add to their headcount and that despite skill shortages impacting the effective operation of their organisation, they’ll curtail salary increases."

“On the other, the cumulative effect of several years of subdued wage growth has seen employees take the initiative to attempt to secure the salary they feel their skills are worth. They’re doing this by asking for a raise or looking elsewhere."

“The resulting salary friction will lead to rising turnover. Already, almost one third (31%) of employers say turnover increased during the last 12 months, while 32% of professionals are either currently looking or planning to look for a new job in the next 12 months.”

In other key findings, the Hays Salary Guide found:

• Flexible work practices are the most common non-financial benefit offered – by 75% of employers – ahead of ongoing learning & development (offered by 74%) and career progression opportunities (68%);

• 63% of organisations offer flexible salary packaging. Of these, the most common benefit is private health insurance, offered by 42% of employers to all employees. This is followed by above mandatory superannuation (offered by 39% of employers to all their employees), parking (35%), bonuses (25%) and salary sacrifice (18%);

• Of the benefits offered to a select few employees, private expenses tops the list, with 74% of employers offering it to a hand-picked number of employees;
• 68% of employers said business activity had increased over the past year, with 69% expecting it to increase in the next 12 months;

• Almost one half (49%) of employers intend to increase permanent staff levels in the year ahead;

• 81% of employers - up from 78% last year (and much higher than Australia’s 70%) - say skill shortages are likely to impact the effective operation of their business or department in either a significant (37%) or minor (44%) way;

• 45% of employers are restructuring to keep up with changing business needs – the key driver of these restructures is a change in the required skill sets;
• In skill short areas, 73% of employers – much higher than Australia’s 57% – would consider employing or sponsoring a qualified overseas candidate.

Get your copy of the Hays Salary Guide by visiting www.hays.net.nz/salary-guide or contacting your local Hays office.

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