What are the noticeable trends you are seeing in the Australian job market when it comes to wages growth?
Wages growth continues to be very restrained across the economy and is in fact at historically the lowest levels we have ever seen. The correlation we have historically seen between unemployment, GDP, and wages growth has unravelled and there are many theories about why; but they are just that, theories. Occam’s razor might apply here: companies are wearing the risk of employee engagement dropping and staff attrition in order to meet the demands of shareholders/investors for rising profits every year.
Are there any anomalies to the general trends you are seeing?
There are plenty of hot spots where there is a talent supply/demand imbalance. Project/Program management for infrastructure developments. Various tech areas including security, data science, machine learning and in general highly capable software engineers. In financial services, it’s risk roles. We see little breakouts of wages pressure here and there but in general companies are using a variety of strategies to meet this imbalance rather than just higher pay.
How would you say Australia’s wages growth and benefit package offerings compare to other countries? Is there anything you’d like to see us adopt here that is successful in other countries?
Australia is a country that enjoys generally high wages at all levels of work (from entry level to executive) in a global context. Many of our basic needs around retirement and health are reasonably well-covered through universal schemes rather than the responsibility of individual employers.
If we could take the best of all worlds it would be the leave programs of the Nordic countries, the tax rates of the Middle East, the stock grants from the US and the salary increases from India… but we’d probably go broke!
What about the gender pay gap in Australia? Does your data point to any noticeable changes over the past 5 years?
We are seeing slow but steady improvement in the gender pay gap. The like-for-like pay gap (people doing the same job at the same level) has been whittled from around 7-8% to 4% in recent years. This is the easy problem to fix though. The bigger one is around equal participation in terms of both the seniority and type of work. We still have a very gender-divided workforce and that requires impact by not just employers but from society as a whole. One of the things we have observed empirically is that those companies who set targets for improving equality of participation deliver faster rates of change than those who have “best intentions”.
Is there any research/data to show whether there is a greater emphasis placed by candidates on fixed or variable pay in this country?
Most studies we have conducted and reviewed indicate a preference for fixed pay unless the variable pay scheme is incredibly attractive. Us Aussies place a fairly sharp discount on rewards that are not guaranteed and are less willing to gamble on ourselves and our employers by entering into heavily performance-oriented reward schemes (despite being the world’s leading pokie machine players!). Our minimum wage laws also have an impact on this. In the US, for example, because the minimum wage is comparably low there is more room to have really heavily performance-oriented packages (it’s even possible to have zero salary roles that are on pure commission).
I heard the CEO of Spotify Australia recently speak. She explained that every one of their 4000 people globally (men and women) are entitled to 6 months of full-paid parental leave to be taken in any way they like up until their child is 3! Which other companies are offering really cool benefits at the moment?
Paying superannuation during leaves of absence, including parental leave, is on the rise in major organisations, particularly in the financial services sector. Not necessarily cool but really important.
We see a growing role for companies to help employees with their financial wellness; many have a very hands-off attitude to this because it’s seen as a bit risky but when it’s done well it’s incredibly powerful.
Jairus Ashworth, Partner – Aon’s Talent, Reward and Performance
Jairus currently focuses on providing reward products and advice to the Technology and Financial Services sectors, and is particularly passionate about supporting Australian companies with growing international operations. Before joining Aon via acquisition he was the Managing Director of CSi The Remuneration Specialists.