Australian Pay Increases on the Decline

Pay increases across  industries are set to experience smaller increases than was hoped, a nation-wide study from Hay Group has revealed.

Hay Group predicts the next 12 months will bear witness to the slowest percentage growth in pay since the GFC, with an average of 3.5% across all industries.

Although the resource sector will see a rise of 4.3%, this is in contrast with the 6.25% increase forecasted a year ago.

Steve Paola, senior consultant and co-author of the Australian Salary Movement Index (ASMI) at Hay Group, stated the conservative salary movements have come about due to a decrease in overall business confidence in Australia.

The changes in salary expectations are reflective of the need of organisations to understand the current trends at all times. “The pay packet is perhaps the most tangible way organisations can communicate what is valued … it is vital not simply to set the bar correctly, but to continually monitor and adjust pay on an ongoing basis,” Paola said.

The smaller increases bring to light the issue of employee engagement and retention. With remuneration still a high priority for many Australian workers, employers will need to get creative to keep their top talent on board.

“Organisations needs to move beyond pay and focus on creating the right atmosphere with the right balance of monetary and non-monetary rewards to drive productivity, performance, engagement and loyalty,” Trevor Warden, senior consultant and co-author of ASMIat Hay Group, said.

Warden and Paola outlined where organisations need to focus:

  • Confidence needs to be emphasised. Managers should look to providing clear direction, support and leadership to their staff.
  • Development remains a priority, with clear pathways and methods of progression communicated to employees effectively.
  • Selection is of the utmost importance in these times, as making sure you have the right employee will minimise turnover in the future.
  • Reward can still be achieved outside of monetary methods. Examine your organisation and employees and figure out what could work for you.
  • Enabling employees to work in an environment that fosters their creativity is important, and makes them understand that despite their pay packets not increasing, they are still valued and appreciated.


20th August 2013