By Matt Drinan
Now in its 50th year, the AIM National Salary Survey (large companies edition) is based on the responses of 458 companies throughout Australia, covering over 300 job roles.
Offering a definitive reflection of the salaries, pay movements, forecasts, HR policies and trends of Australian companies, the 2014 edition revealed some interesting findings:
The skills gap is closing
According to the recently released findings, the skills gap in Australia appears to be closing. The Survey revealed that less than half of large companies (42.9%) reported finding difficulty recruiting staff due to skills shortages, down from 49.2% in the 2013 Survey. According to the Survey, recruitment difficulties were most commonly found hiring for construction and engineering roles.
Pay growth is lagging
When it came to salary movements, the average pay increase recorded over the past year (3.6%) was lower than in the previous year (3.9%) and this downward trend is forecast to continue across all States and Territories.
While large companies in Western Australia recorded the highest pay increase by location, they also recorded the greatest decline in average salary movements compared to the 2013 Survey (down from 5.2% to 4.2%).
All manufacturing related industry sectors recorded notably lower salary movements than in 2013.
The labour market is softening
The proportion of organisations in the 2014 Survey that reported an increase in permanent staff levels in the past 12 months declined from 54.4% in the 2013 Survey to 45.5%.
Providing potential signs of a further softening in the labour market, less than one half (43.2%) of large companies in the 2014 Survey said they expected permanent staff numbers to increase over the next 12 months (down from 46.4% in the 2013 Survey).
While the majority of large companies expect temporary and contract staff numbers to remain the same over the next 12 months, when compared to the 2013 Survey, the proportion that reported they were expecting to increase both (over the next 12 months), has also declined (from 23.0% to 20.8% and from 23.3% to 22.7% of organisations respectively).
Of course, while the current hiring intentions from Survey organisations appear subdued, the results represent a comparatively small change from the previous year and could in part be symptomatic of businesses operating in the context of a still uncertain and challenging business environment.
With continued improvement in the global economy over the next 12 months and potentially stronger than expected growth in the domestic economy (outside of the mining sector), a more robust and sustainable labour market might well eventuate.
Voluntary staff turnover is still an issue
Despite difficult labour market and economic conditions, the Survey also showed a continued increase in rates in voluntary staff turnover, up from 11.7% in 2013 to 12.2% in the 2014 Survey.
The Survey indicated pay was still a key factor influencing employee decisions to take on another role.
For employers, this means that wherever practical, getting pay and financial incentives right by ensuring they are market competitive, is a highly effective strategy in helping to attract, engage and retain talent.
Where this isn’t possible, companies need to be thinking more creatively when it comes to pay. For example, one option could be to introduce well-designed variable reward schemes. These can provide organisations with cost-effective “win-win” pay solutions.
Leadership development and managing performance are key human capital issues
The Survey showed an increase in the proportion of large companies with a set training budget in place, with 59.3% of large companies reporting having a set training budget (up from 54.7% in the 2013 Survey).
Within this group with a set training budget in place, the annual average cost of training reported in the Survey increased when compared to the previous year’s Survey.
The 2014 Survey also found that large companies viewed performance appraisals as the most useful metric to assess the effectiveness of human capital management.
Older workers also a growing issue
While only 12.1% of large companies have made any changes to company policy regarding employment of older workers over the past 2-3 years, this was a notable increase compared to 2013.
Within this group that changed policy, there was a notable increase since the previous year’s Survey in the proportion of organisations that reported making or amending provisions for flexible work arrangements (i.e. job rotation).
It’s great to see companies finally starting to recognize the value of the experience and contribution of older workers.
By making working arrangements for older workers more flexible, organisations win by attracting and retaining highly experienced professionals that, in addition to their specified job roles, often act as mentors to support the development of other staff.
Interested to know more? Visit www.aimsurveys.com.au for more information.
A total of 458 private and publicly listed companies from a broad range of industries contributed to the 50th AIM National Salary Survey 2014 (large companies edition). The large company edition is based on organisations earning more than $10 million annual turnover.
Matt Drinan is the Australian Institute of Management’s Head of Research.