Are you taking a ‘real term’ pay cut? Survey finds inflation bites into salary increase
Workers who take a lower percentage of pay rise than the household inflation rate are taking a ‘real term’ pay cut, Robert Walters Salary Survey found.
Over the twelve months to the September 2022 quarter, Consumer Price Index (CPI) rose to 7.3%.
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While salaries for roles like marketing director can stay above the water, with an average of 33% increase between 2022 and 2023, others like senior business/finance analyst (5.6%), administration assistant (3.5%) and digital marketing manager (0%) are struggling to catch up with inflation.
The survey finds that four in five (78%) white-collar workers expect to start looking for a new job if they do not get a pay rise that beats inflation over the next 12 months. However, over half of employers (56%) said they are not ready to offer that package.
97% of candidates expect the minimum ‘fair’ pay rise during the current cost of living crisis would either need to match or surpass inflation.
More than half (57%) of respondents believed maximising their earning potential was a greater priority than job security over the coming year. Over two-thirds (67%) said fears of a recession and the rising cost of living would not discourage them from seeking a change in roles.
Consequently, on the company side, over two-thirds (68%) of employers surveyed expect the rising cost of living will make it harder for their organisation to retain talent.
Shay Peters, managing director of Robert Walters Australia & New Zealand, said the way forward is for employers and candidates to establish mutual understanding.
“Open and honest conversations are more important than ever, especially with the warning from the RBA that ever-increasing wage offers could drive inflation beyond current predictions.
“We’re finding that where organisations cannot increase salary offers, sign-on bonuses, additional training and boosted leave entitlements can encourage candidates to look beyond mere salary levels and towards an increased quality of life.
“Be nimble, be agile and be prepared to adapt to prevailing economic conditions, because those who are bullish today about securing a new job may change their mind if the market softens and recruitment freezes become commonplace.
“In those conditions, a real-terms pay cut may be viewed in a different light – with a wrong decision all the more painful to bare.”
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Darcy Song was a reporter at Mumbrella, covering media owners, adtech and social platforms. She left in October 2023.
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