MELBOURNE, September 7, 2021 — Pay rises are making a comeback. Australian companies plan to give employees larger increases next year as they recover from the economic fallout of the pandemic and face mounting challenges attracting and retaining employees, according to the latest Salary Budget Planning Report by Willis Towers Watson (NASDAQ: WLTW), a leading global advisory, broking and solutions company.
Almost 45% of companies in Australia expect their business performance to be ahead of target this year and 46.7% to be in line with their business outlook for 2021. Employers in Australia are expecting an average salary budget increase of 2.5% for 2021 and 3.4% for 2022.
Companies in Media, Pharmaceutical and Health Sciences and Manufacturing, reported the highest average salary budget increments at 6.5%, 4.2% and 4.1% respectively for next year. Industries such as Banking, Energy and Natural Resources, and Leisure and Hospitality indicated the lowest average salary budget increase at 2.0%, 2.4% and 2.5% for 2022.
Organisations are also likely to create more jobs in functions such as sales, engineering and information technology. The survey shows that 28% of companies plan to increase headcount in the next 12 months, with only 7.1% planning to reduce headcount. Increments are expected across all levels in organisations, with relatively little differentiation by level.
Adam Hall, Head of Talent and Rewards Australasia for Willis Towers Watson said: “Companies are facing a real challenge when it comes to remuneration planning. On the one hand employers need to continue effectively managing fixed costs, given the uncertainty surrounding the rebound from the pandemic. On the other hand, many companies are experiencing challenges attracting and retaining talent with critical skills and in particular geographies.
This situation has driven organisations to explore alternative options to fixed pay increases, reviewing their employee experience and total rewards framework. In relation to pay, companies are considering sign-on, referral and retention bonuses, functional and skill premiums, mid-year adjustments or pay increases.”
Companies are also going through extensive planning in 2021 and will be experimenting with hybrid models that better fit employees’ lifestyles, which may also result in long-term business savings. The buoyant job market and the challenge of engaging employees outside of an office environment mean that companies will need to pay top dollar to hold on to their top talent.
With the recovering environment in many markets, attrition rates have also moved up in countries with positive business outlooks, including Australia, China, Singapore, Taiwan and Vietnam.
“Attracting and retaining employees remains a major challenge for employers. In fact, the current environment makes these challenges even more difficult. Employers need to deliver a sound employee value proposition supported by comprehensive Total Rewards programmes. Beyond competitive salaries, which are table stakes at the moment, companies also need to focus their spend on a diverse set of health, wealth and career programmes to drive employee engagement,” added Adam.
The 2021 Salary Budget Survey – July 2021 was conducted by Willis Towers Watson Data Services between April and June 2021. A total of 1,405 companies representing a cross section of industries from 13 markets in Asia Pacific participated in the survey. The report provides data on actual salary budget increase percentages for the past and current years, along with projected increases for next year.
Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 45,000 employees serving more than 140 countries and markets. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential.
