New independent research by specialized recruiter Robert Half, coinciding with the release of Robert Half 2021 Salary Guide, reveals that over four-in-five (82 percent) Australian businesses are concerned about losing their top talent due to the impact of COVID-19, driving a reappraisal of remuneration and alternative benefits in the professional services sector.
Salary trends in 2021 for existing employees
For many companies, residual revenue loss from 2020 combined with lingering economic uncertainty is causing wages to flatline, with national wage growth forecast to be a modest 1.5 percent for the year ahead.
Despite a stagnant wage climate, skills shortages are putting pressure on corporate remuneration strategies, particularly as the pool of available talent is diminishing as workers choose the security of staying with their existing employer and stricter visa requirements stem the flow of foreign talent.
As part of an aggressive recovery plan, 70 percent of Australian businesses are continuing to offer remuneration at higher-than-pre-COVID-19 levels to retain talented staff with crucial skills for post-pandemic recovery.
Salary trends in 2021 for new employees
Aside from taking steps to retain existing staff, attracting new skills is also a top priority for companies. Seven in 10 (70 percent) Australian companies are willing to increase their initial salary offering to secure new candidates. Of those, 40 percent plan to increase salary offers for top talent only while 30 percent will increase salary offers for all.
Almost one-third (32 percent) of companies planning to increase salaries for existing staff this year say they will extend salary increases to all employees while almost two-fifths (38 percent) say they will only raise salaries for top performers.
Of those planning to offer a higher salary this year, the average increase is expected to be around 6 percent – in excess of forecast national wage growth levels of 1.5 percent.
Alternative employee benefits
While salary remains important retention and attraction tool, not all companies are able to compete on salary alone as their business recovers in 2021. Two-thirds (64 percent) of Australian businesses are introducing new non-financial employee benefits to compensate existing staff and attract new hires.
Non-financial employee benefits currently being introduced by companies include flexible work hours (32 percent), health insurance (29 percent), and permanent hybrid working arrangements (27 percent) – involving a mix of remote and in-office work hours. After the change and uncertainty of 2020, employees are now placing a high value on company wellness initiatives such as mental health support, gym memberships, and financial counseling (24 percent). Aside from these non-financial benefits, companies can also differentiate themselves in the market by emphasizing career development opportunities and what makes the organization a steady and secure employer.
Among companies surveyed, 67 percent of companies have established ‘flexitime’ policies that allow employees to structure their workday or week as they wish. Compressed work weeks (51 percent) and permanent part-time arrangements (55 percent) are also favored benefits in response to COVID-19. Supporting a healthy work-life balance continues to be a top priority for many, with almost three-quarters of managers (71 percent) committed to offering remote work for the foreseeable future.
Across all industries, the most in-demand candidates will be those who can combine well-developed tech skills with high-level business acumen to help companies forecast, shape, and deliver upon new strategic objectives while leveraging the rapid changes of 2020 into future growth.
At the same time, companies are also seeking candidates who can apply their technical and commercial aptitude efficiently and consistently using a range of soft skills such as the ability to deal with uncertainty, pressure, and maintain performance during difficult and unpredictable times.
“2020 was a turbulent year for employment in Australia as the pandemic sent shockwaves through the economy. As the market shifts into recovery mode, opportunities will start to expand again as companies kickstart new initiatives and agendas – a considerable number of these driven by the shift to remote working, business planning, and revenue generation, and digital transformation and cyber-security agendas,” said David Jones, Senior Managing Director Asia Pacific in launching Robert Half’s 2021 Salary Guide.
“Although competitive salaries remain key to retaining and attracting skilled candidates, not all companies can offer the highest salaries for the skills they need – particularly in sectors still feeling the impact of COVID-19. With upward pressure on salaries likely to increase in the coming months, the business impacts of COVID-19 are causing many companies to embrace non-financial benefits to help differentiate themselves in the market and add sufficient alternative value for employees to offset any perceived gap in remuneration. Benefits that support employees’ work-life balance, the flexibility of work hours, and hybrid remote and in-office roles are likely to be some of the lasting workplace legacies of COVID-19 in the upcoming jobs landscape,” Jones concludes.