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Wages growth to outrun inflation rate

  • 72% of white collar employers tip wages growth above 3%
  • 68% say that skills shortages are driving salary increases
  • Situation most acute in the resources states of WA and QLD

Annual wages growth for white collar professionals is forecast to increase at a rate that exceeds the RBA’s underlying inflationary target range of 2–3 per cent, according to a survey conducted by global recruitment firm Michael Page International.

Some 72 per cent of employers surveyed predict an average salary increase above 3 per cent, with higher rises in the pipeline for business critical skills. Respondents cited professional skills shortages and the escalating competition for talent as the main drivers of wages inflation.

“Salary pressures build when the demand for skills outweighs supply. We are seeing this at the moment because employers are offering increasingly competitive salaries and bonus incentives to attract and retain top performers,” said Phillip Guest, Regional Managing Director of Michael Page Australia and New Zealand.

The Michael Page Salary & Employment Forecast, which this year incorporates the responses of more than 1,400 hiring managers from Australia’s corporate sector, also reveals a strong alignment between performance and financial reward.

Of the employers surveyed, only 12 per cent will be giving their employees a standard increases across the board. The majority (69 per cent) will vary the level of financial reward with the level of performance.

“Corporates are closely aligning financial reward with performance in a targeted approach to retaining and developing their best people. This applies to base salary increases as well as bonuses,” said Mr. Guest.

The survey results also point to a two-speed employment market flowing from the resources boom. Of the mining and resources companies surveyed in WA and QLD, 92 per cent say a skills shortage will impact their operations over the next 12 months.

“The booming resources sector has already led to a shortage of professionals like engineers, geologists and operations managers. When you look at the sheer volume of oil and gas projects in the pipeline, it is clear the war for talent and associated salary pressures will be an ongoing challenge for employers. Many will recruit talent from international markets in response to intensifying domestic skills shortages,” said Mr. Guest.