Sixty-six per cent of employers will give their staff a pay rise of up to three per cent in their next review, with a further 22 per cent set to award between three and six per cent.

But according to the annual Hays Salary Guide, released earlier this month, five per cent of employers will not increase salaries at all. At the other end of the scale, seven per cent will increase salaries by more than six per cent.

Both these figures represent a slight drop over the last 12 months, from 10 per cent and 11 per cent respectively, suggesting employers, as a group, are bringing their salary intentions into line.

The Hays Salary Guide is based on a survey of more than 500 organisations in New Zealand, representing almost 187,000 employees, as well as placements made by the recruiter. It shows that employers have a positive outlook yet remain cautious when it comes to salaries.

“Employers tell us they expect business activity to rise and plan to increase permanent and temporary headcount, yet they remain cautious on the salary front,” says Jason Walker, managing director of Hays in New Zealand.

“At the same time, candidates are aware of the improved economy and the job opportunities out there and are actively seeking a new role. Add snowballing skill shortages and such sedate salary rises seem at odds with the trends.”

Other findings from the Hays Salary Guide include:

• Business activity increased for 75 per cent of employers in the past 12 months, while four in five (81 per cent) expect business activity to increase in the year ahead;
• 53 per cent foresee a strengthening economy in the coming six to 12 months;
• 48 per cent expect to increase permanent staff levels, far exceeding the 9 per cent who say they’ll decrease;
• Meanwhile 20 per cent expect to increase their use of temporary and contract staff, also exceeding the 8 per cent who anticipate decreasing in this area;
• 21 per cent now employ temporary and contract staff on a regular ongoing basis and another 46 per cent employ them for special projects or workloads;
• 28 per cent of employers say staff turnover increased in their organisation over the past year;
• 80 per cent of employers, compared to 74 per cent last year, are worried that skill shortages will impact the effective operation of their organisation or department in a significant (37 per cent) or minor (43 per cent) way;
• 63 per cent of employers offer flexible salary packaging. Of these, the most common benefits offered to all employees are private health insurance (offered by 43 per cent of employers), parking (39 per cent), above mandatory superannuation (31 per cent), bonuses (26 per cent) and salary sacrifice (20 per cent);
• 72 per cent of employees have access to flexible work practices, 63 per cent receive ongoing learning & development, 44 per cent health and wellness programs, 42 per cent career progression opportunities, 35 per cent over 20 days’ annual leave and 32 per cent financial support for study.

“With sedate salary growth ahead, many New Zealand skilled professionals are in for a shock,” said Walker.

“For some it will be a good surprise though, since one quarter of employees surveyed don’t expect any salary increase in their next review – far above the 5 per cent of employers who say they will not offer salary increases.

“Of those who do anticipate an increase, their expectations are high; 16 per cent expect a 6 per cent increase or more, meaning a significant portion will be disappointed. This disappointment will no doubt be similar to that experienced by the 14 per cent of people who asked for a pay rise last year but were declined.

“But a further 18 per cent asked for a pay rise and were successful, which perhaps explains why 54 per cent say they intend to ask for a pay rise in their next review. A further 22 per cent are as yet unsure. As the old adage says, fortune favours the brave.”