Australian workers are being advised to persuade their boss for a reasonable salary boost or move jobs with inflation predicted to touch the highest level in 32 years by Christmas.
A Hay’s recruiting study of more than 4,400 businesses found nine in 10 executives were going to offer salary hikes this year as the cost of living problem intensifies.
The problem is that only 37% of them will vote to approve compensation rises of more than 3%.
Inflation rose by 5.1 percent in the year to March, the highest level since 2001.
By the end of 2022, the Commonwealth Bank predicts that inflation will have risen to 6.25 percent, the highest level since the December quarter of 1990.
Even if wages grew by more than 3% for the first time since 2013, the great majority of Australian workers would effectively be receiving a pay decrease.
Wages are only growing at a pace of 2.4 percent, or less than half the rate of inflation, and the Commonwealth Bank predicts that pay growth will only reach 3.25 percent by early 2023.
If their boss does not give them a decent raise, half of Australian workers are considering changing jobs.
A Hays poll of 4,425 skilled professionals in Australia and New Zealand found that uncompetitive pay was the top reason for seeking for a new job, followed by poor promotion possibilities and unsatisfactory management or work culture.
Nick Deligiannis, Hays’s managing director in Australia and New Zealand, said bosses needed to ask their staff what was bothering them, following the upheaval of the pandemic.
‘Employees are reconsidering what they want from work,’ he said.
‘Viewing your employees as your most important customer and adopting competitive salary, benefits and upskilling tactics can help you traverse today’s skills shortage.’
Despite struggling to recruit or keep staff, CommSec senior economist Ryan Felsman said supply chain pressures were eroding revenue, leaving less room for employers to offer decent pay rises.
‘Cost pressures, which are eroding profit margins, are restraining private sector businesses,’ he said.
Unemployment in April fell to 3.9 per cent, the lowest level since August 1974.
In May, the number of jobs advertised on the internet rose by 0.9 or by new 2,754 available positions to a 14-year high of 298,375 spots, National Skills Commission data showed.
The Commonwealth Bank is expecting unemployment to fall even lower to 3.75 per cent this year.
But it also predicted unemployment would climb back to 4.5 per cent in late 2023 as the supply chain crisis, high inflation and a series of interest rate rises slowed Australia’s economic momentum.
CBA, Australia’s biggest bank, is now expecting the Reserve Bank to raise interest rates by 0.5 percentage points in July, followed by 0.25 percentage point increases in August, September and November that would take the cash rate to 2.1 per cent – up from 0.85 per cent.
‘Our expectation is that Australia’s current economic boom has a little further to run and the labour market will remain tight so we don’t foresee a bust,’ it said.
‘But growth momentum is anticipated to slow materially by late 2022 due to a swift and aggressive RBA tightening cycle.’
Prime Minister Anthony Albanese’s government has written to the Fair Work Commission recommending a 5.1 per cent pay increase, in line with inflation, for Australia’s 2.7 million minimum wage and low-paid award workers.
‘Ensuring that real wages for low-paid workers do not go backwards in these circumstances will protect the relative living standards for these workers, prevent further financial hardship and avoid adverse distributional outcomes and broader economic and social risks,’ its submission said.