National salary growth drops to 2.8 per cent

IF YOU work in these three industries, good news — it looks like you’re getting a pay rise. For everyone else, tough luck.

Retail workers can expect a slight pay rise. Picture: Ryan Osland/The Australian

IF YOU work in retail, food manufacturing or agriculture, good news — you’re getting a pay rise. For everyone else, tough luck.

The Australian Institute of Management’s annual salary survey has revealed more bad news for Aussie workers. “Salaries have continued to fall,” said Sam Bell, general manager of corporate services and research at AIM.

“Businesses this year forecast they will increase salaries by 2.8 per cent, which is in real terms basically zero, if you take into account inflation [of about 1.5-1.7 per cent]. That’s fallen from about 4.1 per cent growth in 2012.

“Across all states we’ve seen a fairly consistent result, all states are declining, and by industry, every industry is seeing a nominal decline except for three: retail, FMCG [fast-moving consumer goods] manufacturing, and agriculture.”

Salaries in most industries are expected to decline over 2017 by between 0.5 and 1 per cent, but AIM forecasts agriculture workers should see a slight increase of 0.1 per cent, retail workers will get a 0.17 per cent rise, while FMCG factory workers are in for a 0.3 per cent increase. “They’re small increases, but in the scheme of things, these three industries are bucking the trend,” said Mr Bell.

The end of the housing construction boom will hit wages in the construction and engineering sector, where salaries are forecast for the biggest fall of 0.65 per cent, while state and federal hiring and pay freezes are expected to hit wages in government institutions and social services by 0.28 per cent.

Mr Bell said while the retail sector was undoubtedly under pressure, forecast wage increases could be due to the casualisation of the workforce. “There’s not a lot you can to retain an employee outside of paying them more,” he said.

“For full-time employees you can provide development support, more challenges in their day-to-day roles, to keep them satisfied and hungry. You don’t need to continually offer them large pay rises. Agriculture and retailing, those sectors are very much more casualised.”

In the FMCG manufacturing industry, the problem for employers is slightly different.

“Margins are tight as well in FMCG, so it is a surprise because it is the largest gain from an industry perspective,” he said. “[But] just compare working in FMCG manufacturing to, for example, professional services firms like PwC and EY.

“They invest significantly in the development of their staff in other ways — management and technical abilities, providing them with opportunities that will challenge them across their career. I don’t think you can draw the same line in FMCG manufacturing.”

The survey, which interviewed more than 25,000 employees in 270 different job roles, also highlighted a worrying trend for businesses. More than two thirds of employees (69.5 per cent) who voluntarily left their job in the last 12 months did so to go to a similar role, for similar pay, at another organisation typically in the same industry.

That’s a markedly different trend than three to five years ago. “There’s definitely been a significant change over a five-year period,” said Mr Bell. “When the jobs market was more buoyant, people were generally leaving to take up a higher position, to take a promotion for a higher salary — sometimes in completely different industries.”

The three biggest reasons employees are leaving their company now are not being challenged in their existing role (79.3 per cent), limited career advancement (58.2 per cent), and conflict with managers (30 per cent).

“We went through a period where people were promoted almost every year because the economy was growing quite fast,” said Mr Bell. “We’ve had slow growth for a while now and people are getting quite stagnant.”

The survey found training budgets at organisations had been slashed by 15 per cent over the last three years, and nearly half had no formal training policy at all. Meanwhile, the number of businesses making super contributions above the standard has decreased by 10 per cent since 2014.

Mr Bell said businesses needed to offer more solutions for career evolution and foster better management practices to avoid the brain drain. “When people leave organisations, they don’t leave the organisation, they leave the manager,” he said.

“If staff are leaving to go to a competitor for the same role and the same money, it’s kind of an indictment on the organisation.”

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Originally published as National salary growth drops to 2.8 per cent