Recruitment firm Hays has released a survey showing 88 percent of employers intend to raise salaries in the coming year.
Employees have high expectations of pay rises as inflation makes the cost of living an increasing burden. Photo: 123rf.com
That figure is up from 67 percent last year and usually sits around the 40 to 50 percent mark.
The Hays Salary Guide finds 37 percent of employers plan to award increases of 3 percent of more, as they try to combat the skills shortage and stem the flow of New Zealanders heading offshore after Covid-19.
Managing director for Hays in New Zealand, Adam Shapley, told Morning Report there were three key factors driving this.
"The last couple of years of Covid we've had border closures. So we haven't had that normal influx of skilled migrants, people coming into New Zealand," he said.
"People know that they've got an opportunity perhaps to increase their earnings." - Managing director for Hays in New Zealand, Adam Shapley
"Most organisations - and this is 70 percent in our survey, significantly up from where it normally sits - are planning to increase permanent headcounts and have increased permanent head counts.
"If you add into that cost of living increases that we're seeing, it's almost a perfect storm where supply and demand is leading to employees wanting more and knowing they're in a position to demand that and most organisations - nearly 90 percent - are planning to increase salaries."
He said that nearly 40 percent of firms that were planning to increase wages by 3 percent or more, was up significantly from the 10-to-12 percent of companies planning wage hikes found in annual surveys.
Shapley said employers needed to be mindful about how they approached the situation, as expectations of pay rises were high.
"It's important to get the balance of that employer-employee relationship," he said.
"People know that they've got an opportunity perhaps to increase their earnings, but it's also important for employers to manage their expectations. You've got to cut your cloth accordingly as a business to be able to do that."
The latest Ipsos New Zealand issues monitor shows cost of living concerns rank highest among those surveyed.
Cost of living is hovering around 7 percent and it wasn't known how much of a pay rise above 3 percent would be agreed by those 40 percent of firms mentioned in the survey.
Shapley said that would depend on a number of factors, including the sector businesses belonged to.
"Skilled professionals, whether that's a carpenter, through to an IT professional, they're the markets in the skilled professional space where there's real demand and real shortage of staff," he said.
"That's exacerbated particularly in the technology market, for example, or knowledge workers, where we're seeing an increasing number of New Zealanders who live in New Zealand starting to pick up work with offshore organisations, because they don't have to work in the office."
To get a realistic chance of a meaningful pay rise, workers may have to change jobs and organisations, he said.
"Really, the important thing is if you're an employee looking at that, there's an equation that you've got to balance up is - am I happy in my role, do I like what I'm doing, do I like the people I work with and is there progression to do what I'd like to do in this organisation.
"Then have an honest conversation with your employer. It's very clear from the survey and from the organisations that we speak to that most organisations understand the dynamic of the market and they know that it's going to be very difficult to replace anyone who leaves.
"So, that would be the first step and obviously if that's not the case and you don't get what you want then to look externally."
The FY22-23 Hays Salary Guide, released today, was based on a survey of more than 4400 organisations, including 1222 in New Zealand.