8 Dec 2023

Pay rises expected to be lower than cost of living - recruiter

6:26 am on 8 December 2023
Wide Angle View Of Busy Design Office With Workers At Desks - open plan office

File photo. Photo: 123rf

A recruitment agency says most workers are likely to receive a pay rise below the increased cost of living in the year ahead.

The survey by global consultancy Robert Walters indicated about two-thirds of employers were willing to give their staff a pay rise, but almost three-quarters said the increase would be between 1 and 5 percent.

Latest Stats NZ data showed average household living costs rose 7.4 percent in the year ended September, while annual headline inflation was at 5.6 percent in the third quarter.

Robert Walters Australia and New Zealand chief executive Shay Peters said New Zealand firms were not alone in moderating pay increases.

"The cost of sales for an organisation is increasing significantly. However, their own revenue lines aren't increasing at the same rate," Peters said.

"Therefore, the ability to give pay rises to match cost of living and match inflationary pressures is really taking a hit this year compared to the last two years."

Robert Walters Australia and New Zealand chief executive Shay Peters

Robert Walters Australia and New Zealand chief executive Shay Peters Photo: Supplied

Peters said the labour market was still showing signs of constraint, despite increased migration, but he said it was changing.

The survey also showed 44 percent of employers found the lack of applicants were a big challenge, and 43 percent said there was lots of competition for candidates.

"I think we've definitely seen the wind of change come through the labour market. If you think about the balance of power in that employment relationship, it's definitely swinging back more towards what I would classify as the middle ground," he said.

Peters said it was a "healthy place" for the labour market to be and if the pendulum swung too far either way, it would become "unhealthy" and candidates and employers would feel pressured.

The survey also showed 62 percent of employers believed salary and benefits expectations were too high.

Peters said employees, while not happy, would understand the situation their employers faced.

"I think most people can see what's happening in the macroeconomic climate at the moment."

But he said if employees were not happy about the salary increases, they might start looking for other job opportunities next year.

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