With businesses striving to retain their staff by helping them battle the high cost of living as the consumers price index (CPI) increased 4.7 percent over the 12 months to December 2023, the newly released 2024 Robert Half Salary Guide reveals the majority of New Zealand employers have given pay rises to their employees.
Private sector wage growth surged to 6.6 percent in the year to December 2023, spurring employers to prioritise competitive compensation for their staff while also exploring additional ways to keep employees from leaving.
Salary remains the key motivator for both employees staying with their company and candidates thinking about a new role.
“During 2023, New Zealand businesses were open to increasing salaries in a bid to remain competitive in the shifting job market following immense change in previous years. The December quarter saw annual growth in private sector wages above six percent and employee salary negotiations were often successful. However, the tides have changed at the start of the new year with financial stability again at the absolute top of the business agenda,” says Megan Alexander, Managing Director at Robert Half.
When it comes to salaries of existing employees, the majority of companies realise the need to keep pace with increased cost of living as seven in 10 (70 percent) New Zealand employers have increased salaries in the past 12 months. Almost one quarter (24 percent) have stated salaries have remained unchanged while 6 percent admit they have decreased salaries.
As for candidates looking for a new position, more than one third (36 percent) of New Zealand workers point to salary when asked what the most important factor is when considering a new role. Though many go beyond salary. While salary remains the primary motivator for most candidates, 64 percent have identified a variety of non-salary elements as the number one driving force when considering a new job. Aside from salary, the top three factors identified as the most significant aspect when considering a new job are flexibility (12 percent), benefits (10 percent) and company culture (9 percent).
“In the last few months in particular, New Zealand companies have grappled with rising costs and tighter profit margins, prompting them to initiate restructuring and reallocate resources. As a result, companies are being more selective with who they give salary increases to, favouring top-performing talent rather than giving a rise to everyone.
“Some employees have seen a pay freeze the past year, suggesting companies rely heavily on non-financial benefits to retain talent. While these benefits can be a valuable tool, especially when salary increases are not feasible, they are unlikely to be a sustainable long-term solution on their own.
“Businesses are set to face a balancing act when it comes to compensation. They need to offer competitive salaries to attract and retain talent while not hurting the company’s bottom line in a cost-driven market. The key lies in regularly reviewing and benchmarking compensation policies against market trends. By striking a balance between competitiveness and financial sustainability, businesses can successfully navigate the demands of the current job market.
“Businesses with an eye on future growth need to carefully consider who they hire to stay competitive. In-demand candidates have more leverage to negotiate the best possible compensation packages, even with the intense competition for talent having slowed down,” says Alexander.
