- Border closures due to COVID-19 have created a labour shortage.
- Employees are currently in a position to negotiate higher salaries after years of wage stagnation.
- Digital transformation roles are currently highly competitive.
By Megan Breen
After decades of reluctance to increase prices to accommodate higher labour costs, businesses are now being forced to compete to fill positions left vacant by a drop in skilled migration. This puts new candidates, as well as employees contemplating moving jobs, in the driving seat when it comes to pay rises in some roles.
Senior economist at Westpac, Justin Smirk argues that the past 10 to 15 years have seen a move towards lowering labour costs but that may be changing due to border closures during the COVID-19 pandemic.
“Right now the labour market is tight because we have closed borders,” he says. “As a result, there will be some upward drift on wages in some sectors.”
Certainly, data from the Australian Bureau of Statistics show job vacancies in the finance and insurance sector are on the rise. Research from Robert Half recruiters, released in May 2021, shows 61% of Australian CFOs plan to extend salary increases to finance staff in the coming year, and 62% say they are willing to increase their initial salary offering for new financial talent.
A further 72% say they are concerned about losing their top talent due to the effects of the pandemic.
Bargaining with work-life options
Smirk says while there are signs of salaries increasing, another scenario that is likely to play out is in the negotiation of work-life choices, for example requesting the option to work remotely.
“I think there’s going to be people willing to trade off wages for a more flexible lifestyle,” he says. “How much are people willing to bluff their employer that they are willing to walk out the door if they don’t get a pay rise – and how much are employees willing to pay to keep people?”
Finance recruiter Ben Wheeler, director at people2people in Brisbane, says after years of wage stagnation, many people are unfamiliar with how to start a conversation about pay.
“I haven’t seen such upward pressure on salaries in more than a decade and, as a result, people aren’t used to having the conversation. They get nervous and emotional when it comes to money, so it’s important to prepare,” he says. “A lot of people just walk into it without really understanding what it is they’re looking for.”
“I haven’t seen such upward pressure on salaries in more than a decade and, as a result, people aren’t used to having the conversation. They get nervous and emotional when it comes to money, so it’s important to prepare for the negotiation.”
Wheeler says it’s important to show how you have added value while being respectful of the business’s needs.
“Don’t come with a sense of entitlement,” he says. “What are your achievements? Obviously with accountants, if you can quantify it, all the better. It could be through tax savings, or efficiency gains to your system. Be sure to identify the extra steps you have taken.”
What not to do when asking for a pay rise
While there is movement in salaries in several industries, the rapid need for businesses to take up new technologies is driving salary increases across a range of digital roles that support financial firms, says Sydney-based director at Robert Half, Nicole Gorton.
“The employee workforce is in a position of power where they’re able to negotiate, based on the fact that there is such a shortage of skills available in the market, particularly in digital transformation roles,” she says.
“The employee workforce is in a position of power where they’re able to negotiate, based on the fact that there is such a shortage of skills available in the market, particularly in digital transformation roles.”
She suggests researching competitive salaries in the market and having a conversation with the direct hiring manager or human resources department as a crucial first step.
“I’d advise against going into the market, finding out what you think you are worth and coming back and saying, ‘What are you going to pay me?’,” she says. “It breaks trust.
“A pay rise shouldn’t be determined on remuneration in isolation. You need to look at your career in full and your development opportunities, as well as the culture of the organisation, so have that conversation before you make any decisions.”
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