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What matters most to employees in the new work landscape?

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A widening gap is emerging between employee salary expectations and employer offerings, fuelled by a rising cost of living. 

The latest report from Hays highlights increasing employee dissatisfaction, with nearly 40% unhappy with their current pay and a significant majority feeling their salaries don’t reflect their performance. Businesses are struggling to balance addressing cost pressures with attracting and retaining top talent in a competitive market. The rising cost of living is driving employee demand for higher pay increases in FY24/25, with 86% of employers planning to raise salaries in their next review, according to Hays, a recruitment and workforce solutions specialist.

The Hays Salary Guide, Australia’s largest and most comprehensive report on salary and recruitment trends, is now in its 45th year. Based on a survey of over 15,000 respondents, it covers more than 1,270 roles across 26 industries. The report found that the cost of living is the primary reason employees are considering leaving their current jobs for higher salaries. Additionally, there has been a 750% increase in the consideration of cost of living by employers when determining pay raises, and 77% of employees are either looking or planning to look for a new job within the next 12 months.

“The mismatch between what employees want and what employers are willing to offer will play out over  the next year, with almost 40 per cent of employees being dissatisfied with their salaries and 73 per cent  saying it doesn’t reflect their individual performance,” Hays CEO APAC, Matthew Dickason said.  We are seeing a trend of employees expecting higher salary increases over the past three Salary Guide  reports. In 2019, 67 per cent of employees expected a pay rise of less than three per cent. In just five years the  pendulum has swung to 61 per cent of employees expecting a pay increase of more than 3 per cent.” 

The salary increase landscape: Employer intentions vs employee expectations  

Value of salary increase  Salary increase employers  intend to pay  Salary increase  employees expect0%  13% 15%< 3%  37% 24%3-6%  38% 31%6-10%  8% 18%>10%  4% 12%

“When determining the value of a pay rise, employers’ considerations have changed dramatically over  the past 12 months, reflecting the current cost of living crisis and the new pay transparency laws.  Individual performance remains the number one consideration for a pay increase (84 per cent). Other  factors employers will consider include benchmarking for the role, responsibilities (74 per cent), expertise  (53 per cent) and the organisation’s performance (50 per cent). This raises the importance of employee retention with the top three drivers of employees looking for a  new role including rising cost of living (64 per cent), low prospect of promotion (60 per cent) and poor  management and culture (59 per cent). Organisations with set pay structures have also increased salaries significantly from the previous year,  indicating that businesses have addressed potential conflicts with the removal of the pay secrecy clause. 

The year for action: business activity to increase 

“The report also found businesses are becoming more optimistic with 64 per cent believing that business  activity will increase in the year ahead, up from 55 per cent last year,” Mr Dickason said. 

“While 54 per cent of organisations have also reported that productivity has increased either moderately  (36 per cent) or significantly (18 per cent).  

“Despite plans to increase business activity, their intention to add to the permanent headcount has risen by  only three per cent from last year. However, employers’ intention to increase temporary workers has  jumped seven per cent from last year.  

For employers, the extremes of the past few years are stabilising, this leaves open the opportunity for the  bold to take action now and gain the first mover’s advantage.”  

Skills shortage is easing 

Skills shortages have not gone away with 24 per cent of employers indicating that they have intensified  over the past 12 months. However, there has been a 20 per cent reduction in employers reporting  moderate or extreme skills shortages. 

“This year, businesses believed that the skills shortages had impacted their workplace with increased  workloads (64 per cent), lower productivity (62 per cent) and employee engagement and morale (51 per  cent),” Mr Dickason said.  

“Extreme skill shortages of the past year have also eased with 47 per cent of businesses reporting no  skills shortage, or minor ones, and one in five reporting that skills shortages have eased.  

“The construction industry reported the highest level of easing skills shortage. However, education,  defence and architecture are facing extreme skills shortages, with 49 per cent reporting that it will impact  the effective operation of the business, down from a high of 60 per cent last year.  

“The extremes of the past few years are stabilising. Skills shortages are easing, inflation is softening and  productivity is up,” Mr Dickason said. “There is a sense of optimism, yet organisations are still cautious. 

“Businesses need to take their foot off the brake and realise the advantages of our new highly skilled and  adaptable workforce to drive growth. This is the year for action.” 

Top five strategies for employers to increase productivity 

1. Effective communication (63 per cent) 

2. Effective collaboration (50 per cent) 

3. Aligning individual objectives with organisation objectives (51 per cent) 

4. Streamlining processes (47 per cent) 

5. Fostering a sense of purpose (46 per cent) 

“Productivity is obviously top of mind for employers – there is reason to believe we have the tools we  need to accelerate productivity, and that those measures are already having an impact.

“Organisations reported that they believe the four main blockers to productivity included: a lack of  resources or tools, poor communication, poor processes and ineffective leadership,” Mr Dickason said. 

“The workforce’s appetite to learn and continue to develop technical and digital skills is at an all-time  high. Businesses should take advantage of this eagerness to upskill to avoid losing key talent, with 42  per cent of employees saying training programs would help to increase their productivity.” 

The hybrid debate is over 

Hybrid working is here to stay with 75 per cent of employees now working in a hybrid or remote  arrangement with 92 per cent of employees citing hybrid working as their preferred way of working. 

Employers agree, with 74 per cent of employers indicating they have established their onsite versus  remote split and will not be changing it. 

The report found 46 per employees spent either 2/3 days on site and 2/3 days remote, 19 per cent spent  one day remote and four days onsite and 26 per cent of employees used a flexible hybrid method based  on employee and business needs. 

“If working from home is here to stay, then many organisations will need to look more deeply at the  processes and means of communication required for the future,” Mr Dickason said. 

Advice for employers 

“Salary is always a top priority for employees with 71 per cent saying that a pay rise is the most important  factor to their career in the year ahead, but benefits such as learning and development of technical skills  (63 per cent) and being able to work flexibly (54 per cent) are also important factors,” Mr Dickason said.  

“Brand reputation, DE&I and ESG policies are important strategies organisations should highlight to  attract the right talent, and this year’s survey data further highlights their significance. Businesses that  are trusted attract the top talent, and employees that trust their employers stay with them longer.  

“People are at the heart of a great business – even with great AI and technology available, a skilled  workforce with a strong culture is essential to the success of your organisation.” 

Advice for professionals 

“With skills in demand you still have bargaining power, but it’s important to avoid pricing yourself out of  consideration. Yes, employers are investing in salary increases, but margins remain tight. The  commercial reality dictates that salary increases can only stretch so far,” Mr Dickason said.  

“Consider the whole package when you negotiate a new job or your next pay rise. Think about what  you’d really value and what could make a difference to your life and career long-term.” 

Download your copy of the Hays Salary Guide

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