26 Jul 2022

Businesses warned of losing staff as wages fail to keep up with inflation

4:33 pm on 26 July 2022

A new survey says 2022 is becoming the year of the virtual pay cut as wages fail to keep pace with inflation.

New Zealand banknotes being counted

File image. Photo: 123RF

Inflation hit a 32-year high of 7.3 percent last month, but wages increased by 3 percent in the March quarter.

Frog Recruitment managing director Shannon Barlow said some companies in industries like transport and logistics had offered huge pay rises of 30 percent.

But these sectors were more the exception than the rule, she said, with others offering modest incentives like petrol vouchers and grocery hampers.

"There are some winners out of this, particularly some of the the bigger businesses," she said.

"They're saying 'right we've got to secure the talent now so we'll put in some big numbers to attract and retain staff'."

Frog Recruitment managing director Shannon Barlow

Frog Recruitment managing director Shannon Barlow. Photo: Supplied/ Frog Recruitment

She said pay rises were not keeping up with inflation in most cases.

"Wages are not adjusting for inflation and the result is people are going backwards with their budgeting; they're taking 'virtual' pay cuts," she said.

"We are hearing more stories of people not making ends meet and going without the essentials such as food and petrol.

"While some received a pay rise this year, 72 percent of them said the extra take-home money does not cover the skyrocketing costs of petrol and food."

Barlow said their survey of nearly 1000 workers this month showed 59 percent of people received a pay rise.

She predicted the cost to businesses will become greater if they did not pay their talent market rates.

"It's an inevitability that many will lose people to their competitors, to Australia or further afield.

"If employers cannot afford to keep up with market rates for salaries, can they afford to stay in business against competition who can?"

Barlow said with the unemployment rate officially the lowest on record, the recruitment agency was optimistic that a wage adjustment was around the corner.

"We've got employers scrambling for workers and it's obvious we are in a candidate's market right now. The net effect will hopefully create higher wages in line with inflation.

"Employees keep our businesses turning over. It's vital to pay fairly and accordingly."

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