Salary divide grows as employees push for better wages post-COVID

The divide between employee and employer salary expectations has grown in 2021, with the Hays Salary Guide reporting two-thirds of employees will expect a pay rise above three per cent, following changed conditions during the pandemic.

The annual Hays Salary Guide surveys over 3500 organisations, representing over 8.8 million employees and 3800 skilled professionals, to deliver its findings.

Professionals want more money

While 67 per cent of employers say they will increase staff salaries upon their next review, it will be a far less significant increase than what employees are hoping for.

Already, 39 per cent of employees say they are dissatisfied with their current salary. Of these, more than half say it doesn’t reflect their individual performance over the past year.

The Guide also notes a disparity between the salary increases across sectors – with those in the tech and finance industries far more likely to receive a wage increase above three per cent, compared with those in sectors where soft skills dominate.

Salary expectations: the great divide

Nick Deligiannis, Managing Director of Hays in Australia & New Zealand said the value of salary increases is driving a wedge between employers and employees.

“On the one hand, we have almost seven in ten employers intending to increase salaries in the year ahead, which is a remarkable sign of the confidence employers exhibit today. On the other, professionals say the value of these increases is far less than they deserve.”

Deligiannis said employees feel justified in asking for more.

“Employees have put careers and salary on hold over last twelve months – many employers contracted last year so those that were left behind picked up the slack – so they are looking for compensation for that.”

The MD says employers must tread carefully if they want to retain top talent.

“This is creating a gap between what employers will offer and employees say they are worth. This divide must be managed sensitively if employers are to retain staff and attract new talent in short supply.”

Training and culture key drivers for talent

Deligiannis suggests employers that are serious about retaining staff need to look beyond wages to develop a strategy that includes learning and development if they want to keep key staff happy.

After a year in which many skilled professionals put career plans on hold, they are focusing once more on their long-term goals,” he says.

“As our data shows, learning and developing new skills is now more important than a pay rise. A lack of promotional opportunities is also the primary factor driving professionals into the jobs market today. This makes re-investing in career progression pathways and staff development a sensible strategy for the year ahead.”

Skills shortages are real

With international borders closed and state borders in a state of flux, the pandemic has also pressed home the skills shortage to many Australian business owners.

In the next 12 months, 64 per cent of employers say skills shortages will impact the effective operation of their organisation or department, either in a significant or minor way. Skilled employees are capitalising on this fact. Thirty-eight per cent of skilled professionals are looking or planning to look for a new job this financial year, with another 39 per cent open to opportunities. The number one reason driving them into the jobs market is a lack of promotional opportunities, nominated by 43 per cent. Almost one quarter (24 per cent) believe the scope for career progression within their organisation has decreased because of the pandemic.

Road to recovery

Several indicators also suggest Australia is on the way to a V-shaped recovery, with 75 per cent of employers reporting that staffing levels are either above or equal to pre-COVID levels.

Almost one-half (47 per cent) intend to increase their permanent headcount in the year ahead, while 15 per cent will increase their use of temp workers or contractors.

“While there are still vulnerable workers, and the pandemic continues to loom over decisions, it’s encouraging to see more organisations returning to growth and vacancy activity rising,” Nick says.

“Continued economic and job market improvements signal a year ahead full of opportunity for those with the skills employers need.”

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