Big pay rises becoming distant memory for Kiwi workers

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“Guaranteed” annual pay hikes are becoming a distant memory for Kiwi workers – although on average many workers received a 3.2% rise over the last year, according to new salary data released this week.

Mercer’s New Zealand Total Remuneration Survey, which covered 190 organisations, found that – nationwide – salaries increased only marginally from 3% in 2011.

While certain sectors and jobs are receiving above average pay rises, the days of hefty pay packages for all Kiwis are well and truly over, Sarah Barnaby from Mercer said. “Employees should not expect pay rises of 5% or more – as seen before the recession. In fact, 48% of organisations are giving staff less than a 3% pay rise and have no plans to change this.”

The median salary movement is reasonably constant at around 3%, but specific sectors provide larger increases to retain talent, she continued. “On the flip side, there are certain sectors which are struggling to regain consumer confidence and we have seen a related impact on salary increases.”

Organisations should continue to target their salary budgets towards high performers and areas of skill shortages in the business, Barnaby said. “But, given most organisations have limited budgets for fixed pay movements, they will need to look for alternative ways to engage and retain top talent.”

Most organisations can use benefits more effectively by being creative and aligning them with particular employee groups, she added. “Innovative and effective benefits programs can have a measurable impact on retention and engagement, and can be used to meet diverse workforce needs across age groups.”

However, employers need to understand which benefits are highly valued by employees, rather than what they, as an organisation, view as important or desirable to maintain an engaged workforce, Barnaby said.

In fact, there are many alternatives HR can offer in lieu of a traditional pay rise. For example:

  • Training and/or professional development – including financial reimbursement for external training costs or time off for study
  • Career development or progression opportunities and/or plan
  • Leadership and management opportunities
  • Flexible work arrangements or options – including the opportunity to work from home
  • Wellness benefits – such as gym memberships or personal trainers or regular visits from an office masseuse
  • Health insurance
  • Additional holidays
  • Professional or trade association membership reimbursement or subsidies
  • Car parking

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