National salary growth rises for first time in six years

SMALL INCREASE FORECASTS STEADY SALARY GROWTH, IML NATIONAL SALARY SURVEY FINDS

 

  • The 2018 National Salary Survey (NSS) has found Australian salary movement has increased for the first time since 2012
  • Migrant worker employment has dropped with 10.9% less organisations hiring UK workers and 7.2% less hiring North American staff
  • There is a spike in permanent staff employment with 16% more workplaces increasing permanent roles and 14% less decreasing permanent roles
  • More workers are demanding flexible working arrangements in place of pay rises

 

Salary Spike

After a continuing decline in Australian salary movement since 2012, the 2018 National Salary Survey (NSS) has found an increase in wage growth from 2.8% to 2.9%. The recent report released by the Institute of Managers and Leaders (IML) this month has revealed a rise in salary movement for the first time in six years. Despite increasing only 0.1% from 2017, the result forecasts stabilised salary growth in coming years after more than half a decade of declining wage movement.

 

The strongest boom in wage growth is being seen in the business and professional services industry. Workers are expecting a 3.99% pay rise in 2018 and a further 4% forecasted in 2019 – an 18% spike in growth from 2017 and more than double the national Consumer Price Index (1.90% in 2018). Conversely, the largest drop in salary movement was seen in fast-moving consumer goods manufacturing. The sector’s workers should expect 16% less in their pay rises by 2019.

 

Declining migrant workforce

2018 also sees a shift in the origins of Australia’s migrant workforce. The proportion of organisations employing UK and North American staff have dropped dramatically with 10.2% less workplaces hiring UK nationals, and 7.2% less hiring North Americans. However, despite the declining migrant workforce, 7% more businesses are employing talent from Europe and 4% more from China, indicating the rising need for cross-cultural competency in business sectors. The migrant workforce is also seeing a trend towards long-term employment with a 3.1% drop in businesses hiring overseas workers for less than two years. This is against the steady movement towards a casualisation of the Australian workforce in recent years.

 

Permanent staff increases

Migrant workers aren’t the only professionals bucking the casualised workforce trend. Organisations are recruiting more permanent staff with 51% of businesses reporting increases in permanent staff in the past 12 months. The movement towards stable employment is forecasted to continue with more than half (51.4%) of organisations expecting to hire more permanent roles in the next 12 months, while the number of temporary and contract staff are expected to remain the same.

 

Human capital challenges

In the HR sector, the NSS has found a rise in voluntary staff resignations (10%) after a steady six-year decline in voluntary employee turnover. Reflecting the increase in salary growth, 5% less workers are citing traditional issues such as insufficient pay. However, the workforce is seeing a hike in staff demanding more flexible start and finish times and flexible work arrangements.

 

The top reasons for staff leaving remain the same, with 76.5% seeking new challenges, 59.2% citing lack of career advancement opportunities and 21% frustrated with the lack of professional development and training. These findings mirror the top human capital challenges with developing effective leaders reported by 57.4% of organisations as the challenge that poses the greatest risk to their business. Other top issues include engaging and motivating employees, attracting talent, managing poor performance and retaining talent.

 

Commenting on the recently released findings, IML’s General Manager of Corporate Services and Research Sam Bell said, “The salary growth increase is welcome news for Australian workers and bucks a five-year downward trend. This reversal was well illustrated in last week’s Federal Budget, where the strengthening Australian economy is causing a tightening labour market, and applying upward pressure to salary growth.”

 

“It’s clear from the 2018 NSS results that employers are increasingly required to place more emphasis on staff development to attract and retain talent for their organisations”, said IML Chief Executive, David Pich. “Organisations really must start to think about seriously investing in visible career advancement opportunities and professional development for their employees. This creates more effective and high-performing employees, as well as happier staff who will be better able to contribute to the growth of the business in the long term.”

 

2018 is the annual National Salary Survey’s 54th year of providing the Australian business sector with accurate workforce data representing over 25,000 employees. For more information about the National Salary Survey, please visit http://www.managersandleaders.com.au/National-Salary-Survey

 

– ENDS –

 

See below for executive summary of key findings.

 

 

For media enquiries, contact

Whitney Duan, Media & Communications Manager

0417 284 411 | whitney.duan@managersandleaders.com.au

 

 

About the Institute of Managers and Leaders

The Institute of Managers and Leaders (IML, formerly the Australian Institute of Management) is a non-profit Membership organisation. IML assess and awards Chartered Manager, the gold standard marque of management and leadership excellence. For more than 75 years, we have been supporting professionals on their leadership journey. This promotes our vision, “creating better managers and leaders for a better society”.

 

Notes to the Editor: 2018 National Salary Survey Executive Summary

 

Key research findings

 

  • Salary Movements & Forecasts
    • Average salary movement is 2.9%, an increase from 2017 by 0.1% and the first rise in wage growth since 2012
    • Salary Movements vs Consumer Price Index 2009-2018
    • Salary Movements by industry
HighestLowest
Business/Prof. Services3.99%Manufacturing – Metal/Auto2.44%
Wholesale – Machinery/Auto3.60%Manufacturing – Other2.46%
Wholesale – other3.24%Construction2.49%

 

  • Employment of migrant workers
    • Country of origin of migrant workers decreased:
      • United Kingdom – 61.0% to 50.8%
      • North America – 22.0% to 14.8%
      • New Zealand – 25.4% to 21.3%
    • Country of origin of migrant workers increased:
      • Europe (Excluding UK) – 35.6% to 42.6%
      • China – 10.2% to 14.8%
    • Length of employment of migrant workers
      • Up to 1 year – 6.5% (1.1% decrease)
      • Up to 2 years – 8.1% (2% decrease)
      • Up to 4 years – 39% (0.3% increase)
      • More than 4 years/indefinitely – 46.3% (2.6% increase)

 

  • Permanent staffing levels
    • The proportion of organisations who increased permanent staff levels in the past 12 months has increased significantly – 35.8% to 51%
    • The proportion of organisations who decreased permanent staff levels in the past 12 months has decreased significantly – 35% to 21.8%

 

  • Human capital challenges and staff turnover
    • Voluntary turnover rate has increased for the first time since 2012 from 9.5% to 10%
    • Top 5 reasons for staff leaving
      • Seeking new challenges – 76.5%
      • Limited career advancement opportunities – 59.2%
      • Insufficient financial reward – 41.8%
      • Conflict with staff/manager – 25.8%
      • Lack of development/training – 21.1%
    • Reasons for leaving, most decreased from 2017
      • Insufficient financial reward – -4.2%
      • Conflict with staff/manager – -4.2%
      • Insufficient non-financial reward – 4.2%
    • Reasons for leaving, most increased from 2017
      • Lack of flexible start/finish times – 5.6% to 7.5%
      • Lack of flexible work arrangements – 5.2 to 6.6%
    • Top human capital challenges
      • Developing effective leaders – 49.8%
      • Engaging and motivating employees – 42.1%
      • Attracting talent – 39.7%
      • Retaining talent – 38.8%
      • Managing poor performance – 37.8%