Aussies should not expect a pay rise next year, as the average salary increases are about to hit their lowest point in almost a decade, according to Hay Group.
The global management consultancy’s study on salary movement found the predicted moderate rise in inflation for 2016 could mean ‘real’ salary increases of -0.3 per cent next year. This is the first negative wage growth since the Global Financial Crisis.
The financial services sector was found to be one of the worst performing industries, with fixed wages growing at only 2.6 per cent, down from four per cent last year.
To overcome the looming business pressures, many organisations are looking to cap salary increases next year.
According to the survey, around 10 per cent of Australian businesses already implemented pay freezes, while close to 15 per cent expected to take similar measures in the coming year.
Hay Group consultant and co-author of the study, Steve Paola said: “To cushion the blow, organisations need to make existing non-financial reward programs more accessible and ensure they are completely transparent when it comes to communicating with their employees about reward policies.”
“In this pay climate, it is important that businesses invest in areas such as training and development, as well as non-monetary rewards, to keep employees engaged and upskilled. Done properly, this approach presents an opportunity for companies to weather these difficult business conditions while maintaining internal equity.” Paola noted salary movement consolidation was seen in almost all of the country’s major business sectors and in almost all roles.
“Unlike in the past few years, there are very few standout roles or industries when it comes to salary growth. This is seen with the salary movement predicted to be at 2.5 per cent in 2016,” he said.
On a global scale, Australia was found to be one of the worst performing countries, with inflation-adjusted salary growth at 1.2 per cent for 2015. Only North America at 0.7 per cent, and Latin America at -1.1 per cent, faced a bleaker outlook.
