95% of employers to increase salaries: Hays Salary Guide FY23/24 released
Published: 1 June, 2023
- 95% of employers will increase salaries in their next review, up from 88% last year and 67% the year before;
- 66% will award increases of 3% or more – up from 37% last year and 12% the year before;
- 75% say the skills shortage has forced them to offer higher salaries than planned;
- Employee expectations are rising fast – the ‘emotional’ salary component can bridge a financial divide.
An overwhelming 95% of employers plan to increase salaries in their next review, up from 88% last year and 67% the year before, according to recruitment and workforce solutions specialists Hays.
The Hays Salary Guide FY23/24, released today and based on a survey of over 14,000 (consisting of 6,903 organisations and 7,392 professionals), found two-thirds (66%) plan to increase salaries above 3% – another significant step up from 37% last year and 12% the year prior.
The Hays Salary Guide FY23/24, released today and based on a survey of over 14,000 (consisting of 6,903 organisations and 7,392 professionals), found two-thirds (66%) plan to increase salaries above 3% – another significant step up from 37% last year and 12% the year prior.
“The year of the raise”
“We’re calling this the year of the raise, where the promise of higher salaries reflects the intensity of the skills shortage in today’s jobs market,” says Matthew Dickason, CEO Asia Pacific at Hays.
“This year, both the number and value of increases will rise, continuing the upwards trajectory we first noted in last year’s Hays Salary Guide.
“Despite the increased salary boost, employer and employee expectations still fail to align. Many employees feel undervalued and underpaid. Only 28% are satisfied with their current salary, with most (71%) believing it doesn’t reflect their individual performance.”
“This year, both the number and value of increases will rise, continuing the upwards trajectory we first noted in last year’s Hays Salary Guide.
“Despite the increased salary boost, employer and employee expectations still fail to align. Many employees feel undervalued and underpaid. Only 28% are satisfied with their current salary, with most (71%) believing it doesn’t reflect their individual performance.”
The salary increase landscape: Employer intentions vs employee expectations
| Value of salary increase | Salary increase employers intend to pay | The increase employees say would reflect their individual performance and demand for their skills |
| 0% | 5% | 3% |
| < 3% | 29% | 6% |
| 3-6% | 53% | 34% |
| 7-10% | 10% | 31% |
| > 10 | 3% | 26% |
Why are salaries increasing?
According to Hays, there are four key factors motivating employers to increase salaries in their next review:
- Competition amid a growing skills gap crisis: Over three quarters of employers have offered higher salaries than planned to attract skilled candidates (22% ‘substantially higher’ and 53% ‘nominally higher’). Further, many professionals have already benefited from the demand for their skills through a salary increase (30%), new job (13%) or both (19%).
Many employers find that the pipeline of skilled professionals doesn’t meet their needs,” says Matthew. “As candidate supply continues to tighten, employers face increased pressure to proactively attract and retain talented employees.”
- The ripple effect of falling real wages: Almost four in five employers and employees say it’s reasonable to expect pay rises to keep up with inflation (41% ‘strongly agree’ and 37% ‘agree’ that pay rises should keep up with inflation).
“Employers are sensitive to the hidden cost of falling real wages on employee engagement, mental health and wellbeing, morale and job satisfaction,” he said. “While few employers can match inflationary pressures, they are stretching their salary increase budget as far as they can to support their staff.”
- The impact of pay transparency: Many employers are transparent with employees about how salary levels and increases are set to improve fairness and build trust – 33% are transparent with all employees and 31% with select employees.
“We expect these figures to rise in the months ahead, with the abolition of pay secrecy in Australia prompting more employers to audit salaries, scrutinise disparities and make adjustments when required to ensure fair and equal pay,” says Matthew.
- The great ask’: This year, 65% of professionals plan to ask for a pay rise, up from 58% last year and 45% the year before. Further, 64% admit the skills shortage makes them more confident to ask for a pay rise and 52% believe they’d benefit financially from changing jobs.
“Employees still feel they have bargaining power and are more confident to negotiate for better pay,” he said.
The impact of emotional salary
“Salary is undoubtedly the most critical factor in attracting, rewarding and retaining employees today, but employers recognise that benefits also play a significant role,” says Matthew.
“While training, ongoing learning and development and career progression opportunities are essential components of a successful benefits program, just 26% of employees are satisfied with their current benefits.
“They are now placing greater value on emotional salary – the intangible benefits that positively impact their emotional wellbeing and job satisfaction, like more than 20 days of annual leave and wellbeing leave.
“As benefits expand in our post-pandemic world, the emotional elements can make or break the success of your overall package.”
“While training, ongoing learning and development and career progression opportunities are essential components of a successful benefits program, just 26% of employees are satisfied with their current benefits.
“They are now placing greater value on emotional salary – the intangible benefits that positively impact their emotional wellbeing and job satisfaction, like more than 20 days of annual leave and wellbeing leave.
“As benefits expand in our post-pandemic world, the emotional elements can make or break the success of your overall package.”
| Benefits employers offer | Benefits employees want |
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Advice for employers
“The recruitment and salary intentions of employers are notable this financial year,” says Matthew. “The overall trend suggests that many believe investing in their workforce, such as through salary increases, headcount expansions (see below) and upskilling, is key to success.
“To stand out in the race for talent, also review the emotional elements you offer. Consider what else you can offer to attract and retain talent, such as opportunities for growth, wellbeing days, improved recognition, work-life balance or a more positive work environment.”
“To stand out in the race for talent, also review the emotional elements you offer. Consider what else you can offer to attract and retain talent, such as opportunities for growth, wellbeing days, improved recognition, work-life balance or a more positive work environment.”
Advice for professionals
“With skills in demand you still have bargaining power, but it’s important to temper it to avoid pricing yourself out of consideration,” notes Matthew. “Yes, employers are investing in salary increases, but margins remain tight. The commercial reality dictates that salary increases can only stretch so far.
“Consider the whole package when you negotiate a new job or your next pay rise. Your emotional salary can go a long way to bridging a possible financial expectation gap, so think about what you’d really value and what could make a difference to your life and career long-term.”
“Consider the whole package when you negotiate a new job or your next pay rise. Your emotional salary can go a long way to bridging a possible financial expectation gap, so think about what you’d really value and what could make a difference to your life and career long-term.”
Other key findings
- Staff turnover growth slows, but loyalty yet to return: In the past 12 months, staff turnover increased in 45% of organisations, down from 58% the year prior. Just 45% of professionals unquestionably intend to remain with their current employer beyond FY23/24, with another 37% unsure whether they will remain.
- Uncompetitive salaries and cost of living motivate job switching: Of those intending to or considering changing jobs, an uncompetitive salary is the top reason, cited by 48%. This is ahead of the rising cost of living (46%), a lack of promotional opportunities (42%) and a poor management style or workplace culture (38%).
- Employers invest in their headcount: Employers intend to increase their permanent (46%) and temporary or contract (22%) headcount.
- Skills shortage crisis impacts operations: 88% of employers are experiencing a skills shortage, while 40% say the impact of skills shortages has intensified in the past 12 months.
Download your copy of the Hays Salary Guide.
- Ends -
For further information please contact Kathryn Crowden at kathryn.crowden@hays.com.au.
About Hays
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