Employers are overwhelmingly planning to increase salaries amid the cost of living crisis, however, it may not be enough to match inflation.
A whopping 95 per cent of employers intend increasing the salaries of their staff in the next 12 months, according to the latest Hays Salary Guide.
That’s an increase from 88 per cent of employers from the 2022-23 financial year and 67 per cent from the year before.
The increase in salaries across the board has led Hays to call the FY2023/24 the “year of the raise”.
Two-thirds of employers (66 per cent) say they plan on increasing salaries above three per cent, a move which Hays says is “a big step up from 37 per cent last year and 12 per cent the year prior”.
However, the bump in salary may not be enough to satisfy workers, who are battling the highest level of inflation in decades after years of low wage growth.
“Only 28 per cent of professionals are satisfied with their current salary, with most (71 per cent) believing it doesn’t reflect their individual performance,” the report read.
“Two-thirds say it doesn’t align to external typical salaries.”
The wage price index (WPI) has rebounded from its 1.4 per cent low in late 2020 and early 2021 to hit 3.7 per cent in the March quarter.
However, the price of labour is rising much lower than inflation, with the consumer price index (CPI) rising 7.0 per cent over the 12 months to the March 2023 quarter.
Essential items are leading the inflation hike, with annual increases in food costs hitting eight per cent and housing costs rising by 9.8 per cent.
The employers surveyed overwhelmingly planned to increase salaries below the 7.0 per cent CPI, with 53 per cent planning on handing down a 3-6 per cent increase and 29 per cent intent on an increase of less than three per cent.
That’s in line with the 41 per cent of employees who can expect to receive a 3-6 per cent increase. However, 57 per cent believe they deserve an increase of at least seven per cent.
Almost four in five people (78 per cent) believe it’s reasonable to expect pay rises will keep up with inflation.
As the cost of living continues to rise, “jobseekers have an eye on their remuneration” despite the intention of most employers to increase salaries, according to Hays.
Nearly half of employees (46 per cent) say they will negotiate their salary if they don’t receive a satisfactory pay rise and 52 per cent believe they’d financially benefit from switching jobs.
Behind the boost in salaries is the increased competition for workers caused by a skill shortage in Australia.
According to Hays, 64 per cent of respondents said there is a shortage of skills associated with their profession and three-quarters of employers have offered larger salary packages than planned to attract skilled candidates.
On top of that, employees are more likely than ever to ask for a raise.
This year, 65 per cent of professionals plan to ask for a pay rise, up from 58 per cent last year and 45 per cent the year before.
The skills shortage is also leading to increased self-assurance within the workforce, with 64 per cent of workers saying they are more confident in asking for a raise.