Firm grip on salary purse strings

According to the 2016 Salary Guide, produced by international recruitment company Hays and containing salary and recruiting trends for more than 1000 roles, just 23 per cent of New Zealand's workforce can expect a salary increase of 3 per cent or more in their next review. Instead the majority of workers (68 per cent) will receive an increase of less than 3 per cent, and the final 9 per cent will receive no increase at all.

The research also shows that nearly two-thirds of Kiwis received a pay rise of less than 3 per cent in the past 12 months. Just one in five saw their pay increase between 3 and 6 per cent, and a lucky 8 per cent received a raise of 6 per cent or more.

Jason Walker, managing director of Hays in New Zealand, says although New Zealand may no longer be a "rock star" economy, the recruitment market is still buoyant, and employers are responding to growth in many sectors by adding highly skilled professionals to their headcount.

"But one thing they aren't doing, so far at least, is using salary to attract and retain these people. Despite a steady job market and demand outstripping supply for the top talent, especially those with local experience, for the most part employers remain cost-conscious," Walker says.

"Will employers be able to maintain this salary stance for long? It's unlikely, given candidates are already starting to take matters into their own hands."

The Salary Guide also shows increasing numbers of employees looking around for a new job - staff turnover is up in 23 per cent of organisations.

And more than half of those surveyed are planning to ask for a pay rise at their next review, in contrast to the 70 per cent who didn't get up the gumption last year.

But it's not all bad news for Kiwi employees. Despite many companies not being keen to loosen the purse-strings to retain top talent, they are more likely to offer additional benefits, such as flexible working conditions, subsidised parking and increased superannuation contributions.

Jonathan Greening, business director of Hays' Lower North Island and South Island operations, says small salary increases have been a reality for many employees for several years.

"The reason is twofold. Many employers haven't had to increase salaries -- we are heading towards a skills shortage but we're not in the depths of it yet. Employers are also waking up to the fact that salary is not necessarily the driving force behind staff retention. There are a number of other factors above and beyond salary. There is a lot of manoeuvrability around flexibility, for example."

More than three-quarters of businesses surveyed reported allowing for flexible work practices, whether that was in terms of hours worked, start and finish times, working from home and time off in lieu. Greening says companies that are prepared to be flexible not only get to hold on to valued employees, but can also benefit from the diversity this can bring their organisations.

"Companies who want to be innovative and flexible can build their business or improve their productivity by having a broad range of opinions represented in their employee mix, and you often get that from hiring people with varied cultural and gender and experience backgrounds."

Nearly three-quarters of businesses surveyed are expecting to be affected by shortages of skilled employees in the next year, with 25 per cent expecting the impact to be significant.

About the same amount - 76 per cent - would consider employing or sponsoring a qualified overseas candidate to fill the gap.

"We will see an increased demand for overseas candidates, particularly in skill-shortage areas," Greening says.

"In a lot of other areas there is a little bit of supply left, but it won't take much of an increase in demand to use that up and then companies will have to look overseas."

As well as the construction boom, especially in Auckland, driving a demand for architects and engineers, other hot areas are accountancy and finance and IT, especially in the digital space, Greening says.

Growth might be slower in other sectors, "but we're seeing a general increase across industry full stop."

The Salary Guide research showed 45 per cent of companies had already increased permanent staffing levels in the past year, and 44 per cent expected levels to go up in the next 12 months.

Hays has seen an increase in Kiwis returning from Australia and Australians themselves crossing the Ditch in search of improved opportunities.

"The other thing we've noticed is an increase in people wanting to come over from the UK - not just British people, but also Kiwis."