The report further stated that almost half of all jobs (49 percent) in the private sector recorded a wage movement, with the average hourly wage increase being 5.8 percent compared to 4.3 percent in September quarter, 2022. The main drivers were:
In last year’s Mercer survey, 22 percent of employers said they planned to increase salaries in line with or above inflation for 2023. In reality it was 27 percent, and in 2024 25 percent expect to do the same.
The salary increase forecast will be maintained in 2024.
Mercer Australian salary outlook 2024 forecasts Australia median merit salary increase of 3.5 percent.
With economic uncertainty looming and reports of global economic growth slowing in 2024, hiring plans for the next year are projected to remain cautious.
Australia’s unemployment rate, sitting at 3.7 percent at the end of 2023, is expected to rise to 4.5 percent by the end of 2024.
The scarcity of job opportunities and ongoing cost of living pressures will all lead to employees being more inclined to stay put in their roles and focus on career progression.
By the end of 2024, inflation is projected to be 3.25 percent, and expected to decrease further to 3 percent by mid 2025, and 2.75 percent by the end of 2025. According to Mercer, 26 percent of the employers they surveyed do not plan to consider inflation into their 2024 salary increase budgets. This figure was at 14 percent in last year’s survey.
Hiring and retention will continue to remain a primary concern in 2024. A Mercer study states that 60 percent of organisations say they have difficulty hiring or retaining employees in certain roles. Australian respondents to Mercer’s ‘Total Remuneration Survey’, said roles in sales, marketing, and product management; engineering and science; IT, telecom and internet; and production and skilled trades were the most difficult to fill and retain.
LinkedIn, in its recent ‘Talent Trends Report’ says that compared to a year ago, most respondents to its 12-country Workforce Confidence Index have shown they are less confident in their prospective career progress. As seen in the graph below, Australia is lagging considerably in this aspect.
The 2023 Skills Priority List Report from Jobs and Skills Australia shows that 36 percent of occupations were in national shortage in the country. And skills shortages among professional group occupations remained severe (48 percent in this category were in shortage).
Come 2024, companies need to focus on the following to remain competitive in the current labour market:
The salary budget forecasts remain high for 2024. However, with economic growth slowing down potentially leading to a more cautious approach in hiring, coupled with a higher unemployment rate and a lower employee turnover, pressure on salary adjustments for 2024 may ease.