Hays have recently released their annual remuneration survey for Australia and New Zealand. At the report’s launch, and throughout the document, one thing is really clear – it’s becoming a challenging labour market for employers.

Obviously, the labour market has been going through difficult times due to Covid 19. Casual workers and those in the most affected industries have endured job losses and high levels of employment insecurity. Elsewhere, many skilled workers have stuck with their current roles.

As we emerge, faltering somewhat, into Covid-normal, employers are reporting that their headcount is returning to pre Covid levels, and that they are planning to grow. 47% of employers surveyed by Hays expect to increase their permanent headcount in the next 12 months (50% in the health care sector), and 15% expect to increase temporary or contract staff.

However, employers understand that it’s going to be a tough market. Nearly two-thirds of employers expect skills shortages to impact their organisations’ operations, and 22% say that they don’t currently have the skills needed to deliver their strategic objectives.

The skills they are looking for are not necessarily what you’d expect. 95% of employers say ‘soft’ skills are more important than technical skills. In particular they are looking for team working, problem solving and communications skills.

The key impacts of skills shortages will be on existing employees having to take on more work, and on project delivery and productivity. Clearly this represents risks to employee engagement and morale.

Whilst employers expect to increase salaries to support retention and attraction, there is a significant gap between employer and employee expectations. Seven out of ten employers plan to increase salaries, but only 12% are looking to increase them by over 3%. This is consistent with RBA assessments that wages growth will remain slow until 2024.

The recently released Pro Bono Salary Survey of not for profit salaries across Australia presents a mixed picture of salary changes over the last year. Not for profit CEOs are not expecting pay rises, and the report shows a small (2%) decrease in CEO salaries. However other senior roles have seen above inflation increases. The report attributes this to a changing cohort of respondents, rather than a clear sector trend.

In contrast, 67% of skilled employees responding to the Hays survey say that an increase of 3% or more would reflect their individual performance, with 39% dissatisfied with their current remuneration. New questions in this year’s Pro Bono survey found that not for profit leaders are looking for increased compensation through bonus payments against individual or team performance – with more sector leaders looking for bonuses than currently receive them as part of their remuneration package.

Even more worrying for employers, skilled employees are on the move. Nearly 2/5 are looking for another job this year, with the same number open to new opportunities.

These labour market pressures are particularly intense in our sector. The National Skills Commission reports that health care and social assistance has been one of the most Covid resilient sectors, with further growth predicted due to population growth, an ageing population and full scheme NDIS implementation. We should also expect to see increased demand for workforce in aged care, on the back of the Royal Commission recommendations and Federal Budget commitments.

National Disability Services’ latest workforce census shows an increase in the permanent workforce in the disability sector, alongside increases in turnover of both disability support workers and allied health professionals.

Feedback that we hear from CEOs and senior executives of not for profit organisations is consistent with these messages. Some employers are trying to recruit as many as ten roles a week, yet struggle to attract enough suitable applicants.

If you can’t compete at the top salary levels, what are you to do?

The Hays report gives some guidance here.

  1. Career progression

Focus on learning and development and career progression opportunities for your existing workers, as lack of career progression with their current employer is driving skilled workers into the job market. Employees said that learning and development and career progression are more important to them than a pay rise (65% against 58%).  In addition, by cross-skilling workers, employers can offer professional development to their employees, whilst mitigating some key person risks within their business.

  1. Pay transparency

Provide better transparency around pay. If you can’t meet expectations about the level of pay, at least draw attention to the value of the full benefits package, and provide some clarity around how pay is calculated. 70% of employees said that pay transparency is important, but only 25% of employers offer it. Building understanding of how pay levels are set will increase trust.

  1. Health and wellbeing

Continue to focus on employee health and wellbeing, including offering flexible working arrangements, or hybrid working, that balances face to face contact in the workplace with scope for employees to work remotely, where job roles allow.