NSW pay rises not keeping up

National salary movements are increasing despite the slowing economy and are expected to continue rising, a remuneration study has revealed.

Mercer’s 2008 Market Issues survey of more than 250 companies found that salary movements for a person in the same role, year on year, have broken the four per cent barrier after trending upwards for the past four years, higher than the 4.7 per cent increases 12 months ago.

NSW isn’t faring as well as the rest of the country, however.

The State is one per cent below the national average movement and has seen the slowest salary growth of all Australian states.

The survey found that Queensland had finally outpaced Western Australia to become Australia’s new salary-growth leader.

Mercer broad-based performance and rewards leader David Abusah said it was important to note that NSW has traditionally enjoyed higher fixed-pay levels than other states, which were now playing catch-up.

"Mercer’s Market Issues survey found the demand for skilled labour in the resource-rich states of Queensland, South Australia and Western Australia is driving higher fixed-pay increases for non-management roles, as opposed to management roles, an indication that salary movements in these regions reflect the need for additional resources required to get the job done, with employers paying more to attract and retain the skills in demand,’’ Mr Abusah said.

The survey found the top human capital priorities for employers over the next 12 months were building leadership capability and acquiring and retaining key talent.

Mr Abusah said employers were tightening their belts in response to the economic slowdown.

But he said they were also aware that continued investment in talent management was needed as the demand for skills remained strong.

"Salary movements are forecast to rise again by five per cent over the next 12 months; a sign that despite a slowing economy and lower business confidence, tight labour conditions still exist,’’ he said.

"However, remuneration is only one part of the puzzle when competing for talent and the need to maintain a competitive and differentiated employment offer remains high.

"The major differences between this slow down and those of the past, is that employers are now dealing with a more complex workforce than ever before.’’

Mr Abusah added that the workforce was ageing, had diverse generational preferences and required greater flexibility.

"In addition, our star performers still have numerous career opportunities even in a slowing market so employers cannot afford to be complacent and must balance any cost-cutting initiatives with targeted talent management investment,’’ he said.

Director of serviceseeking.com.au Jeremy Levitt said implementing flexible working hours and providing good remuneration had proved successful in retaining skilled staff in his company.

"We’ve never had an employee leave us in the year we’ve been in business,’’ he said.