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Global recruiter warns of a ‘Big Squeeze’ – on wallets and talent

New research indicates the majority of salary increases given in 2024 will be below COL and a squeeze on talent to upskill

New research indicates that most Kiwis will get a pay rise in 2024 but it is likely to be below the increased cost of living (COL), indicating another year of financial challenges for kiwis already struggling with the cost-of-living crisis.

67% of employers who responded to the annual Salary Survey Guide by global recruitment consultancy Robert Walters, said they are looking to give their employees a salary increases, but almost three quarters (73.6%) said the increase would be between 1-5% – which is below the current cost of living 7.4% . [1: https://www.stats.govt.nz/information-releases/household-living-costs-price-indexes-september-2023-quarter/]

The Squeeze on Salary Increases

59% of employees stated that ongoing inflationary pressures impacting their profitability are affecting their ability to offer pay rises over the next 12 months.

Shay Peters, CEO of Robert Walters Australia and New Zealand, believes that the findings highlight the fact that it’s going to be a tough year ahead for everyone.

“The high cost of living is affecting both employees and employers. Companies who have borrowed money during times of cheap finance are now feeling the pinch as interest rates remain stubbornly high and inflationary pressures impact costs across the entire supply chain. Businesses acknowledge it is tough out there for their employees with 82% of employers anticipating the cost of living to be a central issue in pay negotiations. But continued inflationary pressure, coupled with economic uncertainty, and reduced consumer spending, means that it’s a real challenge for some businesses to meet the expectations of their employees. The research indicates there is going to be a squeeze on spending and a tightening on purse strings and, because of the skills shortage, a squeeze on talent to upskill.” Mr. Peters continued: “With living costs remaining high and household budgets squeezed, we’re starting to see employees become more focused on base pay rates versus benefits. The Covid experience has driven a desire for more flexible working options, and while the research suggests that this is still important for many workers, we are beginning to see employees prioritise the money they get in their back pockets versus benefits.

“Employees aren’t naive to the fact that it’s tough for everyone but that doesn’t make the reality of the situation any easier for them”, said Mr Peters.

The Salary Survey Guide found 72% of businesses acknowledge that the rising cost of living will make it harder to retain talent. Businesses are trying to compensate for the minimal salary increase, with 60% saying that over the last year they are offering additional initiatives and benefits to support employee retention including: Flexi/remote working

Holiday entitlement

Maternity /paternity leave

Private Health Insurance Medical & Mental Health Assessments

Travel Insurance Subscription Services e.g. Netflix, Spotify, Hello Fresh Training Subsidiaries Gym Memberships Extended holidays / sabbatical schemes

Company car/allowance Mortgage allowance Student loan repayment

Shared parental leave Dental cover Transportation allowance Company contributory pension

The Squeeze on Talent

The results for the Salary Survey Guide highlight that there is an ongoing skills shortage, with 62% of employers seeing the biggest challenge when sourcing staff is that salary and benefits expectations are too high. 44% cited a lack of applicants was also a big challenge, with 43% pointing to the high competition for candidates being a concern.

“Businesses are still navigating their way through an ongoing skills shortage. The survey showed that 73% are reskilling their existing employees to mitigate the shortage. But businesses may need to look to more innovative and non-traditional employment channels for example enlisting talent offshore,” said Mr Peters.

To access a copy of the 2024 Salary Survey, please click here https://engage.robertwalters.com/salary-guide-2024

 

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